samchain/econo-pairs-v1 huggingface dataset:
While at first read this looks like a rare piece of good news, viewed through the lens of efforts to return inflation to target it is a mixed blessing. Indeed, the association with the mid1970s is not reassuring in that respect. Tight labour markets support wage growth, currently running at rates above those we typically deem as consistent with the inflation target. Crucially, the low unemployment rate reflects a fall in labour market participation to a significant extent. In other words, people are choosing to stop working or looking for work. The reasons for this rise in 'inactivity' are still being explored, but the after-effects of the pandemic on health are probably a key driver. Aside from the impact of long Covid, the backlog of operations and lengthening of waiting lists in the health service owing to the pandemic, the rise in mental health issues, and an increased need to provide at-home care for family members have all weighed on labour force participation. This is an area where we need further work, since the UK appears to be something of an outlier relative to its advanced economy peers. Another supply-side driver of labour market development is migration. Understanding the impact of Brexit and new government policies in the area are key. Demand issues are also now beginning to exert an influence. As the economy slowed through this year, vacancies have turned. Employment has stagnated and is now showing tentative signs of falling.

Per Mr. Yam gives a broadbrush picture of Asian monetary co-operation Jacobsson Lecture given by Mr. Joseph Yam J.P., Chief Executive of the Hong Kong Monetary Authority in Hong Kong, on 21/9/97. Introduction 1. Good afternoon. On behalf of the people of Hong Kong, particularly those of us at the Hong Kong Monetary Authority, let me extend my warmest welcome to all of you to Hong Kong. For those of you who have visited Hong Kong before, perhaps many times, I hope you are pleased to see that Hong Kong, as a Special Administrative Region of the People’s Republic of China, remains as vibrant and dynamic as you have known in the past, retaining much of its free market characteristics, under the principle of “one country, two systems”. 2. It is a great honour and privilege for me to be invited to give this year’s Per Jacobsson Lecture. As a Managing Director of the International Monetary Fund (IMF), Mr Per Jacobsson led a life that was dedicated to the promotion of both European and later international monetary co-operation. It is only befitting that a lecture held in Asia in memory of this great man should address the topic of Asian monetary co-operation. This is also a subject that has been brought to sharp focus in the light of the recent turmoil in the currency markets of Asia. 3.
Figure 14 MPR corridor (*) (quarterly average, percent)  12 11 10 9 8 7 6 5 4 3 2 1 0  24.III  24.II  24.I  23.IV  23.III  23.II  23.I  22.IV  22.III  22.II  22.I  21.IV  21.II  21.I  Sep.22 corridor FTS EES Jun.22 corridor MPR Forward MPR Sep.22 meeting  (*) The corridor is constructed according to the methodology described in box V.1 of March 2020 MP Report and box V.3 of March 2022 MP Report. For details, see methodological note in figure II.1, chapter II, September 2022 MP Report). Source: Central Bank of Chile. 17

I will explain why. But first I would like to describe very briefly what characterised the crisis. The characteristics of the financial crisis I have experienced two crises in the past, one in the late 1970s and early 1980s and one at the beginning of the 1990s, and have seen them both mainly from the perspective of the Ministry of Finance. When I came to the Riksbank I believed that the worst crises were behind us. However, this was not the case. Instead we experienced a third crisis, which in international terms was the most severe crisis since World War II. The financial crisis hit Sweden and the rest of Europe with full force in September 2008, when the major US investment bank Lehman Brothers filed for bankruptcy. It became much more difficult for the banks to fund their operations as the financial markets were not functioning normally. Some markets were not functioning at all. The central banks took on the role of lenders of last resort and several governments provided guarantees and support programmes for the banking sector. Monetary policy also quickly became more expansionary in the United States, the euro area and other countries. In addition, a number of central banks adopted measures to also push down the longer-term interest rates. There was also a shift towards a more expansionary fiscal policy. Despite extensive policy stimulus, the financial crisis led to a severe downturn in the United States and Europe and in developed countries in other parts of the world.
Øystein Olsen: A changing global economy Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration (NHH) annual Spring Conference, Oslo, 31 May 2011 The text below may differ from the actual presentation. This speech does not contain assessments of the economic situation or current interest rate setting. *  *  *  Over the past decade, the pace of change in the global economy has picked up. Emerging economies1 have assumed a more prominent role. These developments have generated challenges and opportunities, not only in emerging economies but also in the advanced economies. In my speech today, I would like to focus on three key macroeconomic trends:   First, the global economy has long been characterised by substantial imbalances in international trade. Large surpluses in many emerging economies have their counterpart in large deficits in traditional industrial economies. This generates tensions.   Second, capital markets have not been able to cope with the high level of saving in emerging economies. Real interest rates have been low for a long period and new imbalances have arisen. Sovereign debt is now high in a number of countries.   Third, growth in emerging economies has resulted in higher demand for energy and commodities. While the price of money has fallen, prices for energy and commodities prices have been pushed up. This has amplified the imbalances for many countries, but has had a favourable impact on Norway.

Prices have also risen considerably over the past year as a result of poor crop yields in many parts of the world following storms and drought. Our analyses of the outlook for the world economy and the Norwegian economy are based on the assumption that oil prices will remain at the current level. It is difficult to predict future prices with any assertion. Should oil prices show a marked decline, the oil fund mechanism will to a considerable extent shield the Norwegian economy from the short-term negative consequences of a fall in oil revenues. However, our petroleum wealth will be reduced. On the other hand, should oil prices continue to rise, the Government Pension Fund Global and the fiscal rule provide a sound and robust system for coping with higher revenues. The investment strategy for the Government Pension Fund Global Let me now turn to how the changes in the world’s economic geography influence the investment strategy of the Government Pension Fund Global. Chart: Norway’s terms of trade Norway has profited from globalisation, through both trade and capital markets. As a major commodity exporter we have benefitted from high commodity prices. At the same time, we have had access to cheap imports from emerging economies. Norway’s terms of trade have improved throughout the past decade. Norway’s national income has risen substantially throughout the oil age. Substantial current account surpluses and the buildup of the Government Pension Fund Global have also made Norway a significant exporter of capital.
This points out to a sort of “circularity problem” whereby it is unclear how informative the information extracted from asset prices actually is. Consider for instance the stable break-even inflation rate at a level close to but below 2% in the euro area. Then suppose that, as sometimes observed on other financial markets -as the money market for instance- for any reason, the market for indexed-bonds is indeterminate in the sense that the market is unable on its own to determine an ex-ante equilibrium price. Thanks to the existence of a central bank, an equilibrium price may however be set if issuers or price-makers believe the central bank will commit to price stability as defined by a year-on-year increase of a consumer price index at around 2% over the medium run. The indexed-bond price will then be set on the basis of the actual conventional bond prices and the long-term nominal anchor defined by the central bank, factoring in certain margins or premia. This clearly indicates the central bank’s credibility, and a stable break-even inflation rate will reflect this aspect. But what else can we draw from this information to take a monetary policy decision? This might be another illustration of what some economists have recently named the “credibility paradox”. On the one hand, the information variable of the central bank is consistent with its definition of price stability: therefore no cause for concern.

Introduction of euro banknotes and coins The introduction of euro banknotes and coins from 1 January 2002 has no direct consequence for Norwegian monetary policy. For households and businesses in the euro area, the new currency will become a physical reality, not just an accounting currency. The practical advantages of the common currency will become more apparent. The euro may be used in twelve countries. The costs connected with currency exchange between the twelve countries disappear. When the national currencies are withdrawn, price differences between the euro area countries will become more apparent. The result may be increased competition and lower interest rates over time. Euro area citizens will develop a more positive attitude to the euro as their money. They will experience that the euro is stable, as it will be reflected in a stable level of retail prices. The changeover period, from the introduction of euro banknotes and coins until the national currencies cease to have legal tender status, is short. Norwegian enterprises and households will also have to exchange their cash in euro area countries’ national currencies. There seems to be a perception that exchange between two foreign currencies in Norwegian banks must be made via Norwegian krone, so that two exchange transactions are actually made, with fees being charged twice. I would like to use this opportunity to point out that there is no rule that stipulates that, for example, German banknotes are to be exchanged into Norwegian banknotes before being exchanged into euro banknotes.
The firm has access to a pool of liquidity providers, and will compare pre-trade price quotes, perhaps making use of proprietary TCA tools from those providing liquidity. It might execute some trades electronically. But it has bigger costs to worry about than FX trade execution alone – including the broader bundle of services it needs across asset classes. And it is conscious that larger FX trades involve material risk, including as a result of market dynamics it doesn’t necessarily understand. So it will also work to maintain broader relationships with liquidity providers – and will tend to revert to voice trading with a trusted counterparty for larger orders, or at times of heightened volatility. It may not always have complete clarity on the basis on which such trades are executed (internalised vs externally traded, principal vs agent) or rejected. And it recognises that, in seeking quotes, it may be leaking information about its position. But broadly speaking it is content with the service it receives on FX, and feels it has bigger fish to fry elsewhere. In many ways, it is hard to label this case ‘bad’. The firm is trying to inform itself about market trends. But it recognises that FX is a professional market, whose complexities it needs assistance to navigate. It knows it may not always be getting the finest price, or the perfect service – but feels that the cost/benefit case for investing in a lot of extra data or understanding is not in its favour.

In particular, according to the European Commission, the eurozone, - a destination for more than half of Poland’s exports - is expected to grow at 2.1 percent in 2006 and 1.8 percent in 2007, which is significantly above a eurozone average growth rate in the years 2002-2005 when it stood at 1.2 percent per annum. There are numerous risks to these forecasts and the balance of risks is slanted to the downside. The International Monetary Fund in its World Economic Outlook published in April 2006 3 mentioned four risks: high and volatile oil prices, tightening in financial market conditions, rising global imbalances and an avian flu pandemic. Let me now comment briefly on three of the risks, and I will address the fourth - financial markets conditions a little later. So far high oil prices have had a remarkably small impact on world growth and world inflation in comparison with previous oil price shocks. For example, in one of the recent speeches 4 titled “Has oil lost ability to shock?” David Walton, member of the Bank of England’s Monetary Policy Committee, analyzes five episodes in which oil prices have risen significantly and tries to uncover the reasons for the relatively benign outcome on this occasion. He comes up with two key conclusions: (1) this time the shock has taken longer to unfold and the economy is less dependent on oil; (2) both monetary policy conduct and monetary policy framework focused on stabilizing inflation have anchored inflation expectations well and prevented the second round effects, ie.
Together with existing legislation that applies stays domestically, the ISDA agreement means that over 90% of the dealer banks’ OTC bilateral trading activity will be covered by either contractual or statutory stays. The second initiative is yet more significant. It is a proposal for a common international standard on the total loss absorbing capacity that globally systemic banks must have.6 It will ensure that shareholders and creditors who benefit in the normal course of business also absorb losses when banks fail. It will establish a level playing field between global systemic banks, while taking into account differences in national resolution regimes. It will set clear roles for home and host regulators in a resolution. And it will give host nations the confidence that they won’t again be side-swiped by the failure of a large foreign bank. It will ensure globally systemic banks finally have the quantum of total loss absorbing capacity that minimises the costs of an unsafe banking system. And, by removing the implicit subsidy that systemic banks have long enjoyed, it will re-establish market discipline. This proposal will of course be subject to public consultation and comprehensive impact assessments. Markets and rating agencies are already adjusting to the determination of authorities to end too big to fail. Credit ratings for globally systemic banks have been downgraded to reflect the much lower probability of state support.

Faced with the possibility that they would have to finance these vehicles themselves, banks with spare cash have hoarded it and have become reluctant to lend to other banks beyond very short maturities. That has been evident in the spreads between interbank lending rates and central bank interest rates in the UK and equally in the euro area and United States. The bottom line is that banks that had financed themselves by borrowing from their peers, or by securitising and selling their loan assets, found that their funding dried up. In the United Kingdom, Northern Rock was particularly exposed. It was able to borrow only at shorter and shorter maturities. The present financial crisis is of a most unusual nature in that it comes against a background of five years of strong growth of the world economy and a decade and more of remarkable economic stability at home. Moreover, most banking and financial crises in the past – from the failure of Overend and Gurney in 1866, to the collapse of BCCI in more recent times – were associated with bad loans and significant losses on assets. The remarkable fact about this crisis has been the relatively small size of the bad loans compared with the total assets of banks. The crisis has arisen instead from the way banks have managed their liabilities. What did the Bank of England – as the central bank – do for the banking system?
The best that we – as economists – can do is continually to learn about the changing nature of the economy. It is impossible to write down any stable “reaction function”. Even if we could identify the shocks hitting the economy, judgement as to how we should react to each of them cannot be set in stone. The structure of the economy changes through time as does our knowledge of the way it works. The MPC is there to exercise discretion about how to react to shocks. Central to the design of a framework for monetary policy is our ignorance and uncertainty about how monetary policy works. The MPC is an institutional response to that ignorance.9 The best way to make technical judgements under uncertainty is by making use of the accumulated wisdom of a committee whose members can pool their knowledge and expertise. This is the motivation behind the MPC and explains its two key features.10 First, it is a committee of experts who, before making their decision, discuss their interpretation of the economic data and learn from each other.11 Our Wednesday afternoon discussions take the form of a debate, not a series of presentations. And on Thursday mornings when the time comes to go round the table and make a decision, it is common, as, for example, happened at our most recent meeting in April, for members to want to listen to the views of other members before making up their mind which way to vote.

Over 60% of respondents thought that the balance of MPC communication was “about right”, although around 20% felt that too much commentary was devoted to the central view of prospects rather than to the balance of risks. Given the emphasis which the MPC places on the fan chart as a means of conveying information about forecasts, it is striking that there is a demand for even more information about the risks surrounding the central projection rather than the central projection itself. There is, perhaps, a lesson here in the need to redress the balance of discussion in the Inflation Report towards the risks and away from the central projection. The view of respondents – largely City economists – in this respect seems to me entirely rational, but in marked contrast to the pressure on us from the press. Some of the words of respondents to the survey convey the flavour of their views. Several commented on the benefits of more information about the range of views on the Committee. For example, “MPC members could do more speeches, interviews and meetings to explain their individual views on the macroeconomic outlook”. And “the key difficulty in framing the communications is that they are clearly meant to convey the views of a group of people rather than one individual.
A recent Reuters Institute study in the UK found that more than half of all 18-24 year olds used social media as a news source and more than a quarter used this as their main news source, for the first time more than TV. 56  These fractions are similar in  the US. Among young adults, social has usurped mainstream media. In some respects, this shift in media methods is the mirror-image of changes in the nature of trust-building. As trust-building has become distributed, personalised and socialised, so too have media methods for conveying information and news. This is likely to have been a two-way process, with technology shaping trust and trust technology. Meanwhile, centralised sources of news have seen trust wane and with it usage. Online and social media often, of course, get their information from mainstream media. This, it could be argued, makes these shifts in media channels less important than might first appear. But looks can be deceiving. As Canadian philosopher and writer Marshall McLuhan first told us over 50 years ago, the medium often is the message. For online and social media, information from mainstream sources is often being filtered and purified, sometimes using search algorithms. These tailor the content to an individual’s tastes and preferences. Quite literally, this is news and information personified. It makes for news and narratives which tend to be self-reinforcing and self-referential. The echoes in this chamber are louder, reach further, last longer. These new media channels make, then, for a different process of news transmission.

An alternative would be to apply these same techniques on a normative and prescriptive basis – how should central banks be communicating to best engage with a wider audience? For some time, this has been as area of active study and policy design by behavioural economists. For example, in the UK the Behavioural Insights Unit (BIU), initially set up by the UK government, has worked on a range of public policy questions, including taxation, regulation and consumer choice. In particular, their work has focussed on how sometimes subtle changes in language can be used to improve understanding by the public and to “nudge” them towards a particular course of action. 74  Understanding the response of the public is often not easy and often calls for the use of randomised control trials familiar from development economics. For example, the Financial Conduct Authority in the UK has recently used these techniques to explore how changes in the language used to describe financial products affects the likelihood of them being understood and purchased by retail investors. In choosing retirement income products, use of the word “annuity” shrunk take-up by 25%. 75  This approach of trialling, eliciting feedback and then adapting is not common in macro-economic public policy. That is, at least in part, for the understandable reason that doing experiments with the general public on a macro scale is a rather daunting task.