samchain/econo-pairs-v1 huggingface dataset:
As Mervyn King, the Governor of the Bank of England, stated explicitly to the point2: “..that’s what we have to do with every variable that we look at, work out why it’s growing faster or slower than it was before and not to use some rather mindless regression.…The secret of good policy is to try and think trough what are the economics of the shocks hitting the economy at present. That in a nutshell is my philosophy of how you should do policy. Don’t rely on regressions from the past.” Having discussed the role of monetary policy and rather complex economic models, I will move on to the final theme which may seem more prosaic, notably measuring current inflation. In general, the production level of economic statistics is probably very high in Norway, as shown in international comparisons by the IMF among others. It would also seem that it is very cost-effective. Improvements are frequently made to the methodology and the compilation of CPI statistics. In August this year, the indices for electricity, books and air travel were revised. Last year, Statistics Norway changed the method for the treatment of rents in the housing market, and the previous year the food index was revised. A general view is that changes in statistics production should be well documented and should place particular emphasis on identifying the effects such changes might have on measured inflation.

While European labor markets are not – and will never be – as integrated as in the United States, goods, services, and capital markets are now fully unified, in many regards to a greater extent than in any other countries. Our studies show that business cycles tend to be more and more synchronized with time, an evolution which allows for greater efficiency and sustainability for a common monetary policy. This shows that monetary union is a self sustaining process: convergence can be a result, as much as a condition of economic integration. This has been termed the "endogeneity of optimum currency area" effects. Enlargement of the euro area As I said before, in contrast with some gloomy predictions made ten years ago, the euro is a success story. Far from being a closed Club, the Euro area is open and has a true calling for covering all the EU members, in so far as they fulfil the convergence criteria. Indeed, adopting the Euro can be seen as a legal obligation for all EU members once they have fulfilled the Maastricht convergence criteria. Monetary union is an on-going process. Starting in 1999 with 11 members, the Euro area has regularly expended. On 1 January 2001, Greece joined the Euro area. More recently, on 1 January 2007, Slovenia was the first of the 10 New Members  2  BIS Review 43/2007  States entered into the EU in 2004 to adopt the Euro; this brought the current number of members of the Euro area to 13.
Michael C Bonello: EU membership - the challenge of change Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the conference “EU Accession, One Year On - Quo Vadis Malta?”, organised by the Malta Business Bureau, St Julians, 6 May 2005. *  *  *  When I argued the economic case for Malta’s accession to the EU in November 2002 I described membership as a concrete, long-term response to the challenge of developing a modern economy with the capacity to generate wealth in a sustainable manner. The experience of countries like Ireland, Portugal, Spain and Greece showed that the EU had indeed proved to be a most effective mechanism for this purpose. A year after Malta’s accession it is clear that membership has indeed opened up new opportunities. The economy now enjoys wider access to export markets, increased competition at home and a greater availability of financial resources under EU funding programmes. While it is too soon to draw definitive conclusions, it has become equally evident, however, that the successful exploitation of the Single Market will depend on our ability to adjust both institutional structures and operating practices to this novel environment and to implement effective competitiveness-enhancing reforms. The intensification of competition in world markets and the growing diversion of both consumption demand and investment to lower-cost countries adds urgency to this challenge.

These developments cannot fail to have an impact on the Maltese economy given its small size and openness and its position as a price taker in international trade. While exporters are experiencing acute competitive pressures, the magnitude of this challenge from abroad, and the threat it represents for employment levels, has not, however, been adequately reflected in the results of the high-level social dialogue taking place in the country. It is in part for this reason that Malta appears less prepared than its competitors to face international competition. Against this background I shall review some of the more important changes brought about by EU membership and the attendant opportunities for Malta. Subsequently, I shall analyse the current economic performance in terms of the country’s ability to adjust to, and capitalise on, the new operating environment. Finally, I shall outline some policy orientations that could be useful in facing up to this challenge. The consequences of EU membership The main consequences of EU accession for Malta can be broadly categorised under five headings.
One argument is that it is good to have some margin as there is a risk that CPI overestimates inflation. For instance, it is difficult to exactly measure price increases as a result of better quality, which is thus not inflation. Another argument is that it is often difficult in practice to implement nominal reductions in prices and  BIS Review 8/2006  3  particularly wages. Some measure of inflation may therefore simplify necessary adjustments in relative wages and prices. At the same time, there have seldom or never been attempts to stabilise inflation at a level much higher than 2 per cent. This may be because this does not sufficiently anchor inflation expectations. Experiences from Sweden and other countries indicate that low, stable inflation is an important condition for favourable economic growth and that the work on maintaining low, stable inflation is made easier if the central bank can act independently. This is why the Riksbank, like many other central banks, has been given greater independence and an inflation target. If the central bank is not allowed to independently formulate monetary policy there may be political pressure to conduct monetary policy that aims to achieve other objectives. How does the Riksbank influence inflation? The tool the Riksbank has at its disposal for steering inflation is the repo rate. This is the interest rate the banks pay to borrow money from us. The objective of changes in the repo rate is to influence demand in the economy and thereby price developments.

It is surprising that this issue is still outstanding, despite the fact that it is more than ten years since the bank crisis occurred and despite a draft bill being taken up for consultation five years ago. We play a central role in the monitoring work and concentrate our task to assessing how the financial system functions and what risks might arise. Our Financial Stability Report is very important here. The aim of this report is to identify potential risks and to influence market operators with good analyses. The third part of the stability work – crisis management – arises because the central government might need to take action to avoid a crisis that threatened the stability of the system. In order to manage a crisis, the central government must be able to assess what consequences will arise if an institution suffering problems should become bankrupt. If these consequences are judged to be serious, the central government must also be able to take measures to alleviate the effects. In extreme cases the central bank can act as “lender of last resort” (provide emergency liquidity assistance, ELA) if this is necessary to prevent the bank system from collapsing. A lot has happened with regard to stability work since 1997 and the work changes continuously as the world around us changes. For instance, the increase in the banks’ operations abroad means that foreign borrowers also need to be analysed to a greater extent. In addition, the stability work must follow the increasing integration of the financial markets.
Banks and governments were being forced to pay even higher interest rates. And credit and economic growth were then falling further, leading to rising unemployment and reduced consumption and investment. This situation posed serious risks not only for the countries concerned, but for the whole euro area. It was hindering the overall economic recovery. It was even damaging the single market, as healthy companies were being curtailed in financing solely because of their location. If this situation had been left unaddressed, it could have created a risk of deflation and threatened the ECB’s ability to ensure price stability. That is why we decided that action was essential. Understanding the ECB’s response How did the ECB respond to this situation? In our analysis, a key reason why our low interest rates were not being passed on was that, earlier this year, some investors had become influenced by imagined scenarios of disaster. They were therefore charging very high interest rates to governments and private borrowers in countries they perceived to be most vulnerable. These interest rates went beyond levels warranted by economic fundamentals and justifiable risk premia. Interest rates do not have to be identical across the euro area. But it is unacceptable if the reason for large differences is the fragmentation of capital markets caused by fears of a euro area break-up. It was clear to us that governments could not address these break-up fears alone.

In other words, ECB actions that support market confidence are of benefit not only to countries in difficulty, but also to the euro area as a whole. Our measures ensure the proper transmission of monetary policy, which means neither excessively high interest rates nor excessively low interest rates. The measures enable the ECB to continue to maintain price stability for the benefit of all citizens of the euro area. The announcement on OMTs has already triggered positive effects. Sentiment in financial markets has improved significantly. Excessive government bond spreads have gone down, a number of banks in stressed countries have been able to regain access to markets and Target2 balances have broadly stabilised. The way forward Let me draw to a close. Actions by the ECB can build confidence in the euro area in the near term. But only actions by governments can secure confidence in the euro area over the longer term. In particular, governments need to work together to establish a stronger institutional structure for the euro area. 4  BIS central bankers’ speeches  This process began in June this year with what has been called the “Four Presidents’ Report”. That report – of which I am a co-author – identified four key pillars on which a stable and prosperous monetary union should be built. These pillars are financial union, fiscal union, economic union and political union. In the near term, the most important pillar is financial union.
For example, as the recession has pushed up the unemployment rate, the demand for office building space has declined; as the recession has led to a reduction in discretionary travel, hotel occupancy rates and room prices have declined; and as retail sales have weakened, this has reduced the demand for prime retail property space. The decline in commercial real estate valuations has created a significant amount of “rollover risk” when commercial real estate loans and mortgages mature and need to be refinanced. The slump in valuations pushes up loan-to-value ratios. This makes lenders wary about extending new credit, even in the case when these loans are performing on a cash flow basis. This means that more pain likely lies ahead for this sector and for those banks with heavy commercial real estate exposures. 2  BIS Review 122/2009  For small business borrowers, there are three problems. First, the fundamentals of their businesses have often deteriorated because of the length and severity of the recession – making many less creditworthy. Second, some sources of funding for small businesses – credit card borrowing and home equity loans – have dried up as banks have responded to rising credit losses in these areas by tightening credit standards. Third, small businesses have few alternative sources of funds. They are too small to borrow in the capital markets and the Small Business Administration programs are not large enough to accommodate more than a small fraction of the demand from this sector.

For those without a university qualification, the probability of being in work three years from now might be 27-37% lower.16  During jobs recessions, many workers choose to move down the skills spectrum to regain a foothold on the jobs ladder.17 But if many displaced workers have low levels of skill and experience, the option of moving down the skills spectrum may not be available or may at least have lower value. Skilling or re-skilling will then be needed. This adds to the time it takes workers to re-enter the jobs market, prolonging high unemployment. 16 17  Henahan (2020). Haldane (2019), Moscarini and Postel-Vinay (2016) and Moscarini and Postel-Vinay (2018). 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  The possibility of labour market mismatches, whether by sector or skill, increases the chances of high unemployment proving persistent, with scarring effects on the economy’s supply potential. Put differently, labour market mismatches raise the economy’s NAIRU – the level of unemployment at which supply bottlenecks and wage pressures re-emerge. The higher the NAIRU, the smaller the degree of slack in the economy. Historically, pandemics have not tended to have a persistent upward impact on prices.18 But a higher NAIRU would be one reason to be cautious before jumping to that conclusion. A second is that the policy response to the Covid crisis, both monetary and fiscal, has been significantly more expansionary than any previous pandemic.
On the contrary – low inflation is necessary for a favourable development of production and employment. Sweden is a clear example of this. 9/10  BIS - Central bankers' speeches  Thank you! 10/10  BIS - Central bankers' speeches

04.11.2020  Statistical Production and Economic Policymaking: A View from a Central Bank 2020 International Conference of Statistics for Society - INE Pablo Hernández de Cos Governor  General considerations Let me first congratulate the Instituto Nacional de Estadística on this anniversary. Since its creation in the very difficult times after the Spanish civil war, INE has continuously grown in stature. Today, it boasts the highest standards in terms of professionalism and credibility. We live in a society overcrowded with data. Every decision we take and every transaction or movement we make are reflected in some or another database. But this per se has not necessarily increased our real information or our knowledge. Many of those data are not structured, lack a precise definition or do not follow a specific methodology. This is why statistics and, in particular, official statistics are so important, as they transform data into real information. And we need this to make sound decisions. Policymaking thus heavily relies on timely, exhaustive and detailed information provided by official statistics. Unsurprisingly, statistical production plays a prominent role in central banks. Several factors are at play here, such as a long-standing tradition in producing and analysing monetary and financial information, staff who are highly experienced in these tasks and good “raw materials”, in part benefitting from the key role of the central bank as the banking regulator and supervisor. I should stress that the autonomy of central banks has also greatly helped enhance the credibility of their statistical output.
According to Dr S Arsaratnam 4 , both the Sinhala kings and the Dutch used Arabic traders to export elephants, gems, areca nuts and spices, and import rice, textiles and other requirements in the 16th to early 18th centuries. The British period that followed the Dutch rule is marked by a continuation of the open-economy policy pursued by ancient Sinhala kings. During this period, the country continued to rely on foreign trade for wealth creation and maintaining high standards of living. Hence, the reliance on services, especially commercial services, for wealth creation was not a new policy paradigm for Sri Lanka. Around the time Sri Lanka gained independence from the British rule, the country’s GDP was distributed in the proportion of 46 percent for agriculture, 20 percent for industry and the balance 34 percent for services. The high share of both agriculture and industry amounting to about a two-third of GDP indicated the prevalence of a limit for their continued growth devoid of a vibrant and efficient services sector. This anomaly was to be gradually, and in a slow pace, corrected in the subsequent five decades. In 1960, a slight improvement in the respective shares was observed with agriculture falling to 38 percent and services rising to 45 percent. The period since then recorded a virtual stagnation of services till early 1980s when the country moved to an open economy regime.

9  The World Is Flat, Penguin Books, 2006  10  For a detailed exposition, see Gurcharan Das, India Unbound, Penguin Books, 2002  11  The personal experience of the author has been that university students normally tend to give priority to paid professional courses over tuition fee-free university courses. In the third and fourth years, only about a one tenth of registered students attend classes, though public money is spent on all of them. BIS Review 4/2007  7  A further benefit which Sri Lanka could gain by promoting a global market based services sector is the possibility of narrowing the current account deficit of the balance of payments through enhanced service income. Historically, Sri Lanka is having an ever ballooning deficit in the merchandise account. With high international oil prices and rising intermediate and investment goods imports, this deficit has risen to a very high and unsustainable level of about 13 percent of GDP by 2006. Countries with such large trade deficits should perforce attempt to generate an equivalent surplus in the services account so as to finance the same. However, the surplus being generated by Sri Lanka in its services account has not been sufficient to fully off-set the trade deficit. As a result, Sri Lanka normally runs a current account deficit of 5-6 percent of GDP which has to be financed through capital flows. This level of a current account deficit, occurring year after year, is not sustainable.
The best way to do this is to craft a plan that starts small in terms of its near-term impact, then grows very substantially over time as the economy grows healthier. Of course this requires that the longer-term consolidation is truly credible. It is also important that any plan have broad bipartisan support so that that households and businesses understand that it will in fact be carried out. We saw in the summer of 2011 when the debt ceiling limit was in play that a failure to come to grips with our nation’s economic challenges and responsibilities can have a large effect on U.S. household and business confidence. We do not want to repeat this experience at the start of 2013. Moreover, what happens will influence how we are perceived abroad. When I meet with economic leaders across the globe they do not doubt the underlying strength and dynamism of the U.S. economy, or the entrepreneurialism and inventiveness of our people. Nor do they doubt that we have the resources and capability to overcome the challenges we face. But they do wonder whether our political system is capable of putting the national interest above partisan interests and making the tough choices needed to address these challenges. If a credible bipartisan agreement is reached, it will strengthen global confidence in the U.S. and underscore to the world that our country remains a great place to do business and invest in.

Inflationary pressure stability is clearly illustrated by low rates of core inflation of non-tradable goods one during this period, being reflected also in checked expectations of economic agents of the market. Meanwhile, after a long non-inflationary period and confirming Bank of Albania forecasts, the annual change of consumer prices revealed a slightly increasing tendency over the second quarter of 2009. The annual inflation marked 2.3 percent in June, reflecting a more complete pass-through of exchange rate deprecation effect on consumer goods prices. The Bank of Albania estimates that this factor may play a higher role in the future for determining these prices, comprising premises for short-term and medium-term shocks on price level. In the face of these developments, the Albanian economy continued to be featured by low public and private savings rates even during the first half of 2009, associated with further enlargement of current account deficit and upward pressures on exchange rate performance. Simultaneous reduction of exports and imports, respectively by 19.6 and 6.3 percent on annual level, made the trade deficit contract by 1.3 percent during first five months of the year. However, reduction of emigrants’ remittances by about 8 percent during the first quarter and the service account deterioration, made the current account deficit record an annual growth of 5 percentage points of GDP during this quarter. Though this deficit goes for financing, to a large extent, the capital and intermediate goods of import, its sustainability deserves a greater attention.