samchain/econo-pairs-v1 huggingface dataset:
Bank staff grade data series on a number of quality criteria, and we use this grading to make the best use of the available information. The basic principle is simple: a sensible approach to economic assessment takes a weighted average of all available indicators, where the weight placed on each reflects the quality of that indicator relative to other available data. Generally speaking, in terms of overall accuracy the highest quality data come from the ONS and other national statistical agencies. This is scarcely surprising, since they have a very comprehensive information base. For example, ONS data on manufacturing output are based on surveys of 10,000 of the UK’s 160,000 manufacturers. All firms with more than 150 employees are surveyed, supplemented by stratified random sampling of smaller companies. Some private-sector business organisations - such as the Chartered Institute of Purchasing and Supply, the CBI and the British Chambers of Commerce - also publish surveys of manufacturers. But these samples are typically less than one-tenth of the size of those used by the ONS. On top of that, the private-sector surveys ask only whether activity has risen or fallen, rather than recording exactly how much activity has changed. This can be a particular problem when sub-sectors of an industry are experiencing dramatic movements in output compared with the rest of the sector.

Over the past ten years, revisions to services output have accounted for more than half of the average revision to GDP growth; and around four-fifths of the variance of GDP revisions can be attributed to revisions to service sector growth. Indeed, research by Bank staff has indicated that the private-sector business surveys may give a better guide to the ONS’s estimate of service sector output growth two years or more after the event than do the ONS’s own early estimates. (In contrast, the ONS’s early estimates of manufacturing output growth clearly outperform the business surveys as a guide to later estimates.) The ONS is well aware of this imbalance. In fact, it has been at the forefront of developing and improving measures of service sector output: within the OECD only the UK and Korea produce a monthly Index of Services production, the counterpart to the well-established monthly Index of Production for the industrial sector. The Allsopp Report should give further welcome impetus to this work. The third focus of the Allsopp Report is the capacity of the ONS to identify and respond to structural change in the economy. The make-up of UK economic activity is constantly changing. Fifty years ago, the manufacturing industry accounted for about one-third of UK output. The service sector made up less than one-half. Today, the corresponding shares are less than 16% for manufacturing, and over 70% for services. Responding to this sort of change is challenging.
The chart shows the share of the central government’s net cash flow from petroleum activities that has been transferred to the Petroleum Fund. The Ministry of Finance first transferred capital to the Fund in May 1996. Since then, the central government accounts have shown a surplus each year and capital equivalent to the surplus has been transferred to the Fund. In 2000 and 2001, almost the entire cash flow was transferred to the Fund, while in the last two years the share transferred to the Fund represented about two thirds of the cash flow. The Petroleum Fund has become large, even compared with the biggest funds in the world. At end-2004, the market value of the Petroleum Fund’s international portfolio was 1 016 billion Norwegian kroner or 124 billion euros. The Ministry of Finance has defined a clear mandate for Norges Bank’s management of the Petroleum Fund. Norges Bank shall seek to achieve an excess return in relation to a benchmark portfolio. Norges Bank has developed principles of corporate governance. For the internally managed assets, Norges Bank has exercised voting rights at the general meetings since the beginning of 2003. The external managers have exercised voting rights for the assets they manage on behalf of the Petroleum Fund since 1999. For that portion of the portfolio that is under internal management, Norges Bank voted at 132 annual meetings on 1 541 items in 2004. Norges Bank voted against the management’s proposal on 18 per cent of the items.

Rather it is in the use of credit derivatives that leave the underlying asset on the balance sheet but transfer some or all of the credit risk. The market in credit default swaps on individual investment-grade corporate and country issuers is becoming more liquid, in some cases, we have been told, more liquid than the underlying bond market. And investment banks pricing new bond issues can increasingly look to credit default swap premia as well as to the spread over the relevant benchmark on any existing debt. Increasingly, also, banks use derivatives to transfer some portion of the credit risk on a loan portfolio rather than selling the portfolio outright, creating so-called 'synthetic' collateralised debt obligations. Data on the size of the market are difficult to come by. But a survey by the British Bankers' Association last year found that outstanding notional principal of all credit derivatives had increased more than three times since 1997 to around $ billion. Some contacts suggest the market may now be even larger than this. But I think it safe to conclude that it is already large and has been growing quickly. In a wider sense, the development of these markets for the transfer of credit risk is highly desirable. The institution best placed to originate a loan is not necessarily best placed to bear the risk. Markets in credit risk allow financial institutions to diversify their exposures across different sectors and geographic regions while maintaining customer relationships.
As with all history, one can take different views on what happened in the past, why it happened and whether it has any significance for us today. Personally, I take three things from it: •  First, there is a sound public policy case for the regulation of insurance. But looked at in the very long context of insurance history, the state’s involvement in the direct regulation of insurance activity is a relatively recent phenomenon. •  Second, coming to the UK, a tidy-minded historian could easily identify some common themes which appear present in different phases of the British state’s involvement in insurance, and perhaps weave them into a coherent narrative. I am less convinced. With the exception of a consistent interest in being able to raise revenue from insurance activity, the motivations and philosophies which have guided the British state’s involvement in insurance matters seem to me to have varied very widely through time. The earliest phase of dispute resolution, the later phase of freedom with publicity, and our current phase of quite intensive prudential and conduct supervision seem to me to be very different. •  Third, although there are important technical differences between ICAS and Solvency II, the basic philosophy remains similar: market-consistent capital regulation coupled with supervision. I do not wish to underplay the huge efforts made by many people across the insurance sector in bringing in Solvency II, but compared to previous shifts in philosophy, the change appears quite modest.

Bottomry, it turns out, was a type of contract whereby a lender would, for a fee, put up money (either in the form of a loan or sometimes a joint stake in the stock) for the purpose of advancing trade. This was on the understanding that “the borrower should, in consideration of a high rate of interest, be freed from liability in the event of certain accidents happening, e.g. failure of goods to arrive at their intended destination” 2. This looks to me rather like a Babylonian version of today’s catastrophe bond. 1  Plantin and Rochet (2007). See also Thoyts (2010). 2  Clayton (1971). See also, Bernstein (1996). 2  BIS central bankers’ speeches  The practice of bottomry flourished due to the proximity of another group of great traders – the Phoenicians, who adapted the basic concept to support trade expansion on the Greek coastline during the 10th and 9th centuries B.C., and to the increasing domination in the Aegean Sea after 800 B.C. of Greek traders who needed indemnity against their cargo. Hop westward across the Mediterranean Sea to ancient Rome, and citizens were paying subscriptions to so-called “burial societies” to cover the cost of expenses associated with their death – a kind of latter-day funeral insurance. This activity evolved such that by the second century A.D. it became common practice instead to pay the relatives of the deceased person a lump sum (the funeraticium), provided their subscription was not in arrears and the deceased had not committed suicide 3.
The increased interdependence of financial systems and economies and the contagion effects can be expected to be among the significant outcomes of financial internationalization. Financial liberalization could for example amplify further the implications of financial stress from other parts of the world on the domestic financial system. It could also accentuate and amplify asset bubbles and boom bust cycles. Other implications are that it could contribute to the widening of income disparities and also to the marginalization of domestic financial institutions if they are not able to perform in a more competitive environment. Finally, volatile capital flows may not only affect the efficient functioning of the financial markets but could result in misaligned exchange rates that do not reflect underlying fundamentals. These potential risks and vulnerabilities continue to be a challenge not only to emerging economies but also to the more developed financial systems and economies. Lessons from the financial crisis While there are benefits to be gained from the internationalization of financial systems, the risks to financial stability have also increased immensely. The risks generally emanate from the greater prospects for contagion following the greater degree of interdependence. These risks would be even more pronounced in emerging economies in which financial systems have yet to become more developed and matured. To be better positioned to reap the benefits from internationalization of financial systems in emerging economies, the crisis provides us with several lessons. Firstly, is to recognize that the different parts of the domestic financial system is highly interconnected.

Figure 10 MPR and expectations (percent) 6  6  5  5  4  4  3  3  2  2 12  13  14  15  16  MPR  FBS, 2nd half August 2014  EES, August 2014  Forward IPoM septiembre 2014 Forward, September 2014 Report  Source: Central Bank of Chile. BIS central bankers’ speeches  13  Table 1 International baseline scenario assumptions 2013  GDP growth  2014 (f) Report, Mar. 14  Report, Jun. 14  Trading partners' GDP  3.5  3.7  3.6  United States Eurozone Japan China India Rest of Asia (excl. Japan, China and India) Latin America (excl. Chile)  2.2 -0.4 1.5 7.7 4.4 3.9 2.6  2.7 1.2 1.5 7.3 5.4 4.1 2.3  LME copper price $ Brent oil price $  332 109  Terms of trade  -3.2  World GDP at PPP  3.1  2015 (f) Report, Mar. 14  Report, Sept. 14  Report, Jun.
For a number of years the confidence in monetary policy and economic policy in general has been high enough to allow such factors to be taken into account. But at the same time it places demands on our communication – that we are clear, for example, about when there is reason to extend the forecast horizon and why. It is also one of the reasons that we introduced some improvements to our decision-making material in our most recent Inflation Report, which we expect will help us explain and justify our actions more clearly. These included extending our forecast horizon somewhat in certain situations. So we do have room for a considerable measure of flexibility. And we have also made use of that over the years. On several occasions, e.g. 2001 and 2003 but also earlier, we made it clear that we had disregarded transitory effects that were affecting inflation. The Riksbank has also referred to developments in asset prices, e.g. in 2000, but we did not believe at the time that it gave reason to allow policy to be affected to any great extent. Recently, however, developments in property prices have had some, albeit limited, significance for our monetary policy decisions. The inflation target is thus our point of departure, and we normally apply a time horizon that reflects the lag with which monetary policy has an impact on inflation. But we are prepared to depart from this if we have good reason to. Our ambition in such cases is to communicate the reasons clearly.

We have also underscored time and again that the rule only helps us part of the way. There may be reason to depart from it. The Riksbank’s clarification of monetary policy in 1999 explains when this may be the case. One reason is the occurrence of a shock that has caused inflation to deviate considerably from target. In such cases there may be a risk of undesirable fluctuations in the real economy if we were to try to bring inflation back to target within the normal time horizon. We have to be able to make allowances for such circumstances; otherwise they could have serious repercussions for the real economy. And our monetary policy framework provides scope for this. But no two situations are ever exactly the same. It is necessary to have a thorough analysis on which to base our standpoints and an explanation for our decisions. Another reason to deviate from the policy rule is if inflation is judged to be influenced by temporary effects, i.e. effects that will diminish without any monetary policy intervention. That, for example, is why we often focus our discussion on UND1X, the measure of underlying inflation that excludes the effects of indirect taxes and subsidies as well as interest rate changes. But it can also be a case of temporary supply shocks that are not expected to persist, such as the sharp rise in electricity prices at the turn of the year 2002/2003.
Third, the Bank takes a countercyclical approach. The UK deploys a Counter Cyclical Capital Buffer (CCyB) through which capital is accrued in the good times for release in the bad. Two years ago, amid heightened uncertainty following the Referendum, we cut the CCyB by £ billion, releasing £ billion of additional lending capacity. As the immediate uncertainty receded, we then required banks to rebuild it. Today their capital buffers are twice as high, meaning the FPC could unlock over £ billion of lending capacity, if required. Fourth, the FPC has identified the major cross-border risks to financial services that could arise in a cliffedge Brexit. 13  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  13  The biggest risks relate to contract continuity. 16 million insurance policyholders in the UK and 38 million in the EEA have policies that firms might lose the permission to perform in a no deal scenario. Around £ trillion of cross-border derivative contracts could be disrupted by the loss of the regulatory permissions required to service them and loss of recognitions for CCPs. The Bank has been working with the relevant parties over the past two years to ensure they have contingency plans for the worst case scenario. In some cases, particularly in insurance, UK financial companies are restructuring so they can continue to serve their EU customers. If all current plans are delivered successfully, the number of EU policyholders at risk will fall to 9 million.

Financial services are a critical tool to help people step onto the economic growth ladder and create a brighter future by tapping their own creativity in creating jobs and incomes. It can also be instrumental for broader human development, by letting clients invest in themselves and seek protection from shocks and bad fortune. It is however, gratifying to note that following the survey, commercial banks and other nonbank financial institutions in Zambia have increasingly become receptive to lending to small and medium-sized enterprises and have in this regard established departments dedicated to small and medium enterprise lending and introduced financial products specifically designed to meet the financing needs of these businesses. In working with Banking on Health, banks have shown interest in learning about the private health sector, a sector whose business characteristics were largely unknown to banks. However, banks can still misunderstand the risks, overestimate the costs, and underestimate the potential returns of lending to sectors, such as the health sector. In addition to the structural barriers in the financial sector that limit access to finance, many private health care providers have limited financial and business-management skills and often struggle to prepare a bankable loan applications or business proposals. It is difficult for commercial banks to assess the credit risk of a loan without the financial statements and business plans to support the loan application.
Consumption is projected to rise by about 5 per cent in 2004, then slow through the projection period as a result of lower growth in real disposable income. Looking ahead, an increase in employment and a tighter labour market are expected to result in somewhat higher wage growth. For 2005, the Government has proposed income tax reductions for households, but the effect on real disposable income will be partly offset by a higher rise in prices as a result of the increase in VAT. Debt accumulation in the household sector has been approximately 11 per cent in the last year. Debt has risen at a markedly faster pace than income. Our projections are based on a gradual increase in the interest rate in line with forward interest rates. Rising debt and higher interest rates will contribute over time to lower growth in household disposable income. In the first three quarters of 2004, imports increased markedly compared with the same period last year. This may indicate that some of the growth in demand has resulted in an increase in imports instead of higher domestic output. Imports as a share of mainland GDP are rising. This is a result of an increase in the international division of labour, due in part to the removal of trade barriers. The rise in the share of imports must also be seen in relation to low prices for imports from many low-cost countries and the weak competitiveness of domestically-oriented industries.

In contrast to earlier periods of sharply rising oil prices, the main reason behind the current rise in oil prices is a surge in demand and limited excess production capacity. Growth in oil demand has been particularly strong in regions where production is relatively energy-intensive, such as China and other non-OECD countries. China alone accounts for about 1/3 of global growth in oil demand this year. Moreover, there has been a marked reduction in excess production capacity in OPEC countries. Small production problems have therefore affected prices more than would otherwise have been the case. In the short term, oil prices constitute the greatest risk to the outlook for the global economy. High oil prices may contribute to a sharper-than-expected slowdown in global economic growth. This could in turn result in lower demand and lower commodity prices. High oil prices have mixed effects on the Norwegian economy. Lower demand abroad will have a negative impact on parts of the Norwegian economy. At the same time, domestic demand is normally stimulated by higher petroleum investment. The balance in the Norwegian foreign exchange market will not be affected to any appreciable extent. So far, the effects of high oil prices on developments in the real economy have been relatively limited. Credit developments in the past year have given ambiguous signals to our interest-rate setting. Growth in household debt is high. Enterprises have been reducing their debt for some time, but developments over the past months may suggest that this trend has been reversed.
21 In other words, monetary policy decision-making is surrounded by various different types of uncertainty. At the Riksbank we grapple with issues such as: Which shocks are currently the driving force behind the business cycle? Which forecasting model gives the best forecasts? How large is the effect of a change in the interest rate on inflation? What characterises well-balanced monetary policy? How should the risk of low inflation be balanced against increased risks for financial instability? Is the data correct? Should special attention be given to really negative scenarios? Figure 13. The Riksbank's forecasts on labour force participation and GDP growth (a) Labour force participation  (B) GDP growth  Note. Thousands of persons, aged 15-74 and annual percentage change. The figure shows the Riksbank’s forecasts for labour force participation and GDP growth 2013–2019 (February). Sources: Statistics Sweden and the Riksbank  There has been greater interest in how to take into account uncertainty in the monetary policy decision-making process since the financial crisis. This has often been about finding a structured way to take into account the uncertainty in the monetary policy decision. Unfortunately, I must say that the answer to this question is not exactly easy and that it can probably be best summarised as “it depends”. In practice, there are three approaches a policymaker can take with regard to uncertainty. He or she can act more forcefully, more cautiously or as if the uncertainty did not exist.

Figure 1a shows how labour force participation has increased steadily from around 71 per cent just after the financial crisis to more than 73 per cent today. This positive development can probably be explained in several ways. The high population growth, which is to some extent due to a high level of migration, could be one factor. A large proportion of the immigrants who have come to Sweden in recent years have been in the age range 25 to 54 years of age, which is a group with a high labour force participation rate. Another factor could be various economic policy reforms that have increased incentives to participate in the labour force. 4 [24]  Another less positive development is the deterioration in matching efficiency. This could be a sign that companies’ requirements and the job seekers’ abilities do not match – for instance because of structural change or deficiencies in the educational system – or because the search and recruitment processes have declined in quality. It therefore becomes more time-consuming and costly for companies to recruit staff. Matching efficiency fell heavily in connection with the financial crisis, see Figure 1b. 8 This need not necessarily be a problem. During economic downturns, some types of competence become outdated at the same time as other and new competences are in demand. For the individual, this can mean that some form of further education becomes necessary. The problem is that matching efficiency appears to have become entrenched at around the same levels as in 2010.