samchain/econo-pairs-v1 huggingface dataset:
Current corporate tax regulation in Spain and in other European countries gives preferential treatment to debt as opposed to equity, since interest payments are deducted when calculating the tax base for corporate income tax. This bias makes issuance of debt more attractive to firms than issuing equity. In this regard, a more neutral corporate tax system that treats these two instruments equally would incentivise a higher resort to equity. Another friction that may discourage firms from issuing equity is the underdevelopment of equity markets in Europe compared to other areas such as the United States. In this connection, one of the aims of the Capital Markets Union project is to foster the development of these markets through different actions, including the removal of barriers that prevent the integration and development of capital markets. The development of equity markets can have several benefits for the corporate sector and for the economy more generally. The resort to equity finance improves the robustness of corporate balance sheets, as a higher share of equity makes firms less vulnerable to adverse shocks such as an increase in interest rates or a fall in earnings.8 This is because equity is not a redeemable liability. Also, equity is a more appropriate instrument for the financing of high-risk projects such as those involving startups, intangibles and innovation.

Research conducted by Banco de España staff using micro data shows that the in the first half of March, just after the outbreak of the pandemic, the sensitivity of the volume of new loans granted by each bank to its capital ratio doubled. This suggested that banks required a higher level of solvency in order to maintain a constant flow of new credit. However, since the second half of March, following the introduction of the public guarantee facilities and the higher flexibility afforded by prudential regulation, this sensitivity returned to its pre-crisis level. The evidence suggests that these measures have contributed to expanding credit supply through the relaxation of capital constraints. 8  Additionally, the terms and conditions of loans arranged under the public guarantee programme have been more favourable than those of comparable loan operations without this guarantee conducted both before and during the pandemic. In particular, interest rates on guaranteed loans are lower than those charged on other loans, and the average loan maturity is more than three years longer. This change in the maturity profile in firms’ liabilities will help them to reduce refinancing risks in the coming years. Firms, mostly large corporates, have also covered part of their financing needs through the issuance of fixed income securities, following the improvement in credit conditions in these markets. However, the share of new funds from this market was lower than in the pre-crisis period, especially in the case of both firms belonging to sectors hardest hit by the crisis and comparatively smaller firms.
Mr. Trichet discusses Franco-German monetary cooperation and monetary union Speech by the Governor of the Bank of France, M. Jean-Claude Trichet, on the occasion of the fiftieth anniversary of the Land central bank of Rheinland-Palatinate and the Saarland in Mainz on 2/6/97. It is a great honour to speak in Mainz today and to celebrate the fiftieth anniversary of the Land central bank of Rheinland-Palatinate and the Saarland. Everybody knows that Mainz played a decisive role in spreading culture and ideas in Europe, in particular thanks to the invention of printing by Gutenberg. And the celebration of the fiftieth anniversary of your institution gives me the opportunity to underline once again the prominent role played by the Bundesbank for the stability, credibility and prosperity of the German economy. As you know, the Banque de France deeply supports this culture of stability, which sets the basis for monetary cooperation between France and Germany, the basis for European monetary union. The celebration of an anniversary is a good opportunity to draw lessons from the past and to foresee the future. That is why I have decided today to speak about Franco-German monetary cooperation during the last fifty years and the prospects for monetary union. In this respect, the creation of the single currency on January 1st, 1999 is a major event for our respective countries. Far from being a breaking off with the past, the creation of monetary union is the logical crowning of Franco-German monetary cooperation.

EMU is not just some abstract concept dreamed up by a few people. It is based on solid economic grounds. When the exchange rate stability provided by the Bretton Woods system and by the barriers between national financial markets disappeared in the 1970s, a number of European governments became progressively convinced of the need for a single currency. The Maastricht Treaty is indeed the result of past major initiatives, such as the Werner Report in 1970 and the Delors report in 1989. BIS Review 63/1997  -5-  The removal of all tariff and non-tariff barriers to trade has made Europe the largest market in the world. The EU accounts for 21% of total world trade, against 17% for the US and 10% for Japan. The benefits of the sheer size of the Single Market are plain to see. The allocation of savings and investments is more efficient, competition is stronger, and the greater liquidity of financial markets makes more capital available at lower cost to finance profitable ventures. No doubt the European Monetary System and its Exchange Rate Mechanism have helped curb exchange rate instability and eradicate the inflation culture that prevailed in some countries; yet the current level of economic and business integration calls for the Europeans to take a further step towards monetary integration, for the benefit of all European economic agents and citizens. The benefits of the single currency are clear. It will reduce uncertainty and facilitate production and investment decisions.
It is this fundamental difference that I intend to talk about today. On a general level one can say that the difference concerns the view of the risks linked to financial imbalances and to what extent monetary policy should be used to counteract such risks. It is primarily the latter that has come to be a recurring theme in the discussions on Swedish monetary policy. Here in Sweden, monetary policy has deliberately not accelerated more, despite the low inflation and low resource utilisation, with reference to the claim that a more expansionary monetary policy increases the risks linked to high household indebtedness. One justification for this deliberation is that the financial crisis has shown how high costs can be if these risks are allowed to increase and that it is therefore worth deviating from the inflation target and allowing a somewhat poorer development of the real economy to avoid indebtedness soaring too high and creating problems further ahead. I can very well understand the wish to prevent new crises and I am not categorically against conducting monetary in this way; leaning against the wind as it is usually called. But if one weighs the advantages of conducting this policy against the disadvantages, I reach the conclusion that there is no justification for it in Sweden today. As I see it, the advantages are small. We do not have a general credit boom in the Swedish economy that needs dampening.

The result was a negative spiral, where expectations of continued high inflation and new devaluations affected price-setting and wage formation. Wage increases in Sweden therefore showed a higher trend increase than other countries. This in turn led to cost crises in the manufacturing industry, which were resolved through devaluations of the krona. This fulfilled the expectations of devaluations and thus sowed the seeds for the next round.1 In the middle of the 1980s, the Swedish credit market was deregulated, which was the starting point for a rapid credit boom and sharply rising prices for financial assets and property. The economic policy conducted could not withstand the pressure and the result was a property market bubble and a very overheated economy. When the bubble burst in the early 1990s, it triggered a financial crisis and a deep recession. Many were assuming that the old pattern would be repeated and that the krona would be devalued. But the political stance on this occasion was instead to once and for all disperse expectations of devaluations and show that they were serious about the fixed exchange rate. As you all know, this proved unsuccessful, despite a policy rate of 500 per cent and explicit support for the defence of the krona. In November 1992 the Riksbank had to give up the fight and let the krona float freely, which meant that it weakened significantly.2  1  See, for instance, Jakobsson (1997) and Jonung (1999) for descriptions of the economic policy problems during this period.
The latest data have not invalidated the outlook for gradual recovery of inflation reflected in the most recent forecasts. Budgetary policy in 2016 As I have said in previous appearances before the Senate, the primary objective of budgetary policy is to ensure that the recovery is underpinned by lasting stability. In particular, it is indispensable to persevere with the strategy of fiscal consolidation leading to the stabilisation and subsequent reduction of the public debt ratio. The improvement in the cyclical conditions envisaged in the macroeconomic scenario used to prepare the draft Budget has a positive effect on public finances owing to increased tax collection, a further drop in unemployment benefits and a progressive reduction of the average interest rates paid on public debt. All this means that the budgetary policy measures to meet the budget deficit targets are less costly. Specifically, the draft State budget envisages economic growth of 3.0% for 2016, slightly below the 3.3% projected for 2015, with growth of domestic demand and a progressive recovery of inflation rates which would lead to an increase in nominal GDP of nearly 4%. Against this background, the overall general government deficit for the coming year will foreseeably stand below 3%, the ceiling established in the Stability and Growth Pact, while the public debt/GDP ratio will decrease for the first time since 2007. The State and Social Security budget under discussion here is the first element of this budgetary strategy. However, a few days ago the general government budget plan for 2016 was released.

However, the decision-making system in the United States is constructed in a way that makes it difficult to take the necessary type of decision. Moreover, my impression is that the problems with the public finance deficit are underestimated in the United States to the extent that they believe growth will resolve much of the problems. On the other hand, they have now decided on certain budget-strengthening measures and the United States usually succeeds in managing difficult problems in the end. The sovereign debt problems in the euro area are actually smaller than the US problems. The deficit in public finances in the euro area is calculated by the IMF to correspond to around 4 per cent of GDP this year. All in all, there is thus less need of budget strengthening measures in the euro area than in the United States and the tightening effects need not be so great. But the deficit is unevenly distributed and some countries have very large deficits and/or national debts. The problem is that even in Europe it appears to be difficult to reach decisions on credible long-term programmes for consolidating public finances. Instead, many countries have been forced by the markets to decide on further budget strengthening during the summer to increase confidence. However, even if the sovereign debt problems in the United States and the euro area are essentially the same, the market turbulence may lead to the situation deteriorating.
During a financial crisis, it is important that there is a system of deposit guarantees to reduce the likelihood of a bank run. There have been such schemes in all of the EU countries for several years now with a minimum level of EUR 20,000. However, they are designed differently in different countries. The Riksbank has therefore argued in the context of European cooperation that these schemes should be harmonised. Under the pressure of the financial crisis last autumn it was decided that the guarantee level should be at least EUR 50,000 in all countries and in the longer term EUR 100,000. However, there are still differences regarding the funding of the guarantees and other regulations. These differences distort competition between the banks in different countries. They also make it more difficult to achieve effective crisis management. 4  BIS Review 7/2009  How Sweden is affected by the financial crisis Sweden's dependence on the outside world Sweden is highly dependent on events in the world around us. Sweden is a small and open economy with extensive foreign trade and a financial market that is well integrated with the international markets. Sweden's dependence on the outside world has increased over time. This means that a global financial crisis combined with a severe international economic downturn has a substantial impact on the Swedish economy. One way of illustrating a country's dependence on developments internationally is to consider exports and imports as a proportion of the total balance of resources.

5 years remaining maturity  Stock markets Index: 31 December 2008 = 100 120  120  110  110  100  100  90  90  80  80  70  70  60  60  50 01 January 2008  50 01 April 2008 Sw eden (O M XS)  BIS Review 7/2009  01 July 2008  01 O ctober 2008  Euro area (EuroStoxx)  01 January 2009  US (S&P 500)  11  Purchasing Managers Index (PMI) Index = 50, unchanged activity 80  80  70  70  60  60  50  50  40  40  30  30  20  20  1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008  Euro area  USA  Sweden  The Riksbank’s balance sheet total ASSETS Gold Foreign currency reserve Lending in USD Lending in SEK Other assets Total LIABILITIES Banknotes and coins Fine-tuning Riksbank Certificates Liabilities to Fed Equity Other Total  12  30 June 2008 26 158 0 4 4 192  31 december 2008 30 200 196 266 7 700  Change 4 42 196 262 3 508  108 0 0 0 59 25 192  112 207 49 189 59 84 700  4 207 49 189 0 59 508  BIS Review 7/2009  Policy rates Per cent 7.00  7.00  6.00  6.00  5.00  5.00  4.00  4.00  3.00  3.00  2.00  2.00  1.00  1.00  0.00 01 January 2008  0.00 01 April 2008  01 July 2008 Sweden  Euro area  01 O ctober 2008  01 January 2009  US  Reporate and mortgage rates Per cent 7.00  7.00  6.00  6.00  5.00  5.00  4.00  4.00  3.00  3.00  2.00  2.00  1.00  1.00  0.00 01 January 2005  01 January 2006 SBAB 3 month rate  BIS Review 7/2009  01 January 2007  01 January 2008  M ortgage rate 3 months  0.00 01 January 2009  Repo rate  13  TCW-index Index: 18 November 1992 = 100 150  150 TCW index  145  145  140  140  135  135  130  130  125  125  120 01 January 2000  14  120 01 January 2002  01 January 2004  01 January 2006  01 January 2008  BIS Review 7/2009
But the effect can be to prolong the economic pain for everyone by reducing spending, and therefore amplifying the effect on incomes and output in the economy. The evidence, across countries, recessions (and US states) is compelling: build-up of household debt means an economy is exposed to more severe recessions (Chart 1). Chart 1 Household debt growth in the boom and the economic severity of the subsequent bust: across US states, countries and time for GDP and unemployment  Source: David Aikman, Jonathan Bridges, Anil Kashyap and Caspar Siegert, ‘Would macroprudential regulation have prevented the last crisis?’, Bank of England Staff Working Paper No. 747, August 2018. Notes: State level household debt statistics (left hand panel) from Federal Reserve Bank of New York; GDP data from Bureau of Economic Analysis (BEA); unemployment data from Bureau of Labour Statistics. Change in household debt to GDP ratio from 2004 to 2007 on x-axis, economic performance from 2007 to 2010 on y-axis. International data (middle and right panels) uses Bridges et al. (2017) dataset: household debt data from Bank of International Settlements “Long series on total credit and domestic bank credit to the private non-financial sector”; real GDP and unemployment data from the OECD, the Global Financial Database and national statistics websites. Middle panel shows experience across 27 advanced economies in the Global Financial Crisis, using same dates as U.S. state panel. Right hand panel is for recession episodes in G10 countries from 1960 to 2004 (i.e. Great Recession not included).

The dash-dotted green curve shows the inflation outlook published after the interest increase of September, which was based on a constant three-month Libor of 1.75%. The red line is clearly lower than the green one. This is partly due to falling oil prices and partly results from the dampening effect of today's interest rate increase. The level of inflation expected in 2007 is 0.4%. However, as is evident from the inflation dynamic, the effect of a 2.00% interest rate is still expansionary. Continuation of previous monetary policy With today’s decision to increase the three-month Libor by 25 basis points, we are adhering to our previous monetary policy course of gradual normalisation. In so doing, we are pursuing the goal of continuing to ensure long-term price stability. If the economy performs as expected, we will further pursue this strategy. Observed inflation December 2006  BIS Review 123/2006  3  Inflation forecast of September 2006 with Libor at 1.75% and of December 2006 with Libor at 2.00%  The National Bank’s 100-year anniversary Ladies and Gentlemen, before concluding, I would like to say a few words on a completely different topic: The Swiss National Bank will celebrate it's 100-year anniversary in 2007. We are happy that we can celebrate this anniversary at a time when Switzerland’s economy is in good shape. And it is also with a certain sense of pride that we can look back upon a long phase of price stability. We will celebrate our anniversary in a festive, yet modest way.
In the case of the pension system, the 2011 and 2013 reforms included a progressive raising of the retirement age, the application of the sustainability factor, which links the initial pension to the increase in life expectancy, and an annual revaluation index for pensions, with their increase conditional upon the system’s revenue and expenditure being in balance. These reforms were geared to gradually correcting the system’s current shortfall, significantly countering the effect of the expected increase in the dependency rate in the long term. However, the latest legislative developments appear to be moving towards relaxing the application of the current re-balancing mechanisms, the sustainability factor and, above all, the annual revaluation index for pensions. A return to inflation-indexed pensions would, on Banco de España calculations, give rise to an increase in public spending of over 3 pp of GDP in 2050 compared with the scenario based on the strict application of the revaluation 8/14  index. Ensuring the system’s financial sustainability would therefore require including additional measures on the revenue or on the expenditure sides of the system. In any event, it is desirable that any reform strategy chosen should increase the system’s transparency, strengthen its contributiveness (i.e. the relationship between contributions and benefits) and, in particular, maintain an automatic adjustment mechanism that ensures the sustainability of the population’s future pensions.

Fostering connections between community colleges and employers is one way we can help to make sure the next generation is ready for the opportunities our economy has to offer. We’ve published loads of research on this subject, and we’re putting some of our findings into practice with a series of roundtables, collaborating with colleges, workforce development organizations, and employers across the state. Displacement and equitable growth are areas where we can do more. I’m pleased to share that later this year we’ll be hosting a series of listening sessions on these topics. We plan to bring together community development experts and nonprofits to better understand what’s happening across the district. We want to know what’s worked in the communities that have seen equitable growth, the challenges for those that haven’t, and what we can do about it. We hope the findings from these sessions serve as a tool for those areas on the cusp of gentrification to ensure every part of the community benefits from local investment. Catalyze Finally, I’m going to turn to this idea of how we can be a catalyst for action. Our desire to create change is the reason we created resource guidebooks—publications that collate data, information, and contacts about specific communities. We’ve published guidebooks for parts of New York State and New Jersey, and we have another one in the works for Puerto Rico. They act as a starting point for local stakeholders and investors looking to support equitable growth in underserved areas.
Altmann, R (2009), ‘Why quantitative easing is a disaster for pensions’, article in The Telegraph. Atkinson, A (2015), Inequality, Harvard University Press. Ball, L, Furceri, D, Leigh, D and Loungani, P (2013), ‘The Distributional Effects of Fiscal Consolidation’, IMF Working Paper, No. 13/151. Ball, R and Chernova, K (2008), ‘Absolute Income, Relative Income, and Happiness’, Social Indicators Research, Vol. 88, No. 3, pp. 497-529. Barnes, L, Feller, A, Haselswerdt, J and Porter, E (forthcoming), ‘Information, Knowledge and Attitudes: An Evaluation of the Taxpayer Receipt’, Journal of Politics. Brynjolfsson, E and McAfee, A (2016), The Second Machine Age – Work, Progress, and Prosperity in a Time of Brilliant Technologies, W. W. Norton & Company. Büchs, M, Bardsley, N and Duwe, S (2011), ‘Who bears the brunt? Distributional effects of climate change mitigation’, Critical Social Policy, Vol. 31, No. 2, pp. 285-307. Buiter, W (2014), ‘Central banks: Powerful, political and unaccountable?’, Journal of the British Academy, Vol. 2, pp. 269-303. Bunn, P, Drapper, L, Rowe, J and Shah, S (2015), ‘The potential impact of higher interest rates and further fiscal consolidation on households: evidence from the 2015 NMG Consulting survey’, Bank of England Quarterly Bulletin, 2015 Q4, pp. 357-368. Bunn, P, Pugh, A and Yeates, C (2018), ‘The distributional impact of monetary policy easing in the UK between 2008 and 2014’, Bank of England Staff Working Paper, No. 720.

The report provides a wide coverage of micro-level risk management practices by households, businesses and the wider community, and how they are linked to macro-level risk management policies by national and global institutions. Essentially, with a better understanding of micro-level risk management, the implementation of macro-based policies can be more effective, not only at the national level but also at the organisational and household levels. The Report further emphasis the need to manage risks in a pro-active, systemic and integrated way, and underscores the importance of forward looking planning and preparation. On this final note, I would like to extend our appreciation to the World Bank for the opportunity for Bank Negara Malaysia to co-host this event. I hope you will find the subsequent discussion on the World Development Report 2014 to be productive and beneficial. 2  BIS central bankers’ speeches