samchain/econo-pairs-v1 huggingface dataset:
The situation in the United States, where the economy is in a cyclically more advanced position and employment levels are close to their structural low, is conducive to the Federal Reserve normalising monetary policy. However, the absence of inflationary pressure, the downturn in and uncertainty over the global economy, and doubts about when interest rates will begin to rise all cast a shadow which has prompted very mixed expectations. As for developments in emerging economies, the slowdown in China, sharp adjustments to its share prices and the depreciation of its currency during the summer have heightened the risks of a steeper-than-expected fall in activity, with effects on the global economy through trade and commodity prices and via indirect contagion effects owing to higher risk aversion in international financial markets. The main issue regarding the Chinese economy is not whether it slows by a fraction of a percentage point more than projected, but rather the external consequences of such a development. For example, a slowdown in growth to around 6% of GDP, compared with 7.3% in 2014, is no grave cause for concern. In principle, these figures, which largely reflect the change in China’s production model to an economy more geared towards consumption, can be managed by the authorities. The uncertainty lies in the difficulty of evaluating the external effects of such changes, and the fact that the differing forecasts of private and public agents are reflected in greater volatility in financial markets.

At present the US still earns positive net income from abroad despite a steady deterioration in the current account since 1991, and a slower rise in its net external indebtedness. This is not to imply that the US is immune to the basic arithmetic of debt sustainability – sooner or later persistent deficits will lead to levels of external indebtedness that represent a significant economic burden even on the US; but it is more than usually hard to predict how long this might take. The dollar’s central role in the foreign exchange policies of Asian emerging markets adds to the uncertainty about the deficit levels at which the US will face tighter credit constraints. Since the foreign official sector – mostly Asian central banks – have been financing a substantial part of the US current account deficit (in net terms) and now hold a substantial amount of the outstanding stock of US Treasuries, private investors’ willingness to hold dollar assets depends to some extent on their expectations of what these Asian central banks will be doing. Since many Asian EMEs already have far more reserves than they need for self-insurance against financial crisis, their appetite for continued accumulation of US dollar assets will at some stage abate: indeed there has been some anecdotal evidence of this over the past year. They can already choose to diversify their reserve holdings, and the options available may become more attractive to them with the development of Asian bond markets. Their development strategies will also evolve.
Towards midyear it was even possible to raise the interest rate substantially to tackle a surprise rise in inflation that was much deviated from the target. This was so thanks to the fact that the purchase of dollars was being carried out mechanically, despite a significantly depreciated exchange rate after the intervention. The purchase of foreign currency was concluded prematurely due to global tensions in global liquidity in dollars in September of last year. The capacity of the Chilean economy to subsequently deal with a significant exchange rate depreciation, with monetary easing prospects and reduced inflationary pressures, is proof that there was no inconsistency between the decision to intervene and the conduct of monetary policy (Figure 2). It also shows that the flexible exchange rate regime adopted early this decade has the economy well prepared to absorb exchange rate fluctuations without the turmoil that used to come with them in the past. 4. Bubbles, exchange rates and capital inflows in emerging economies  Latin America went through a period of large capital inflows in the first part of the 1990s (Calvo et al., 1996). We cannot disregard the possibility that after the current crisis is over, there will be a reemergence of inflows to emerging economies. Therefore, there could be strong pressures for a sharp increase in the valuation of domestic assets, with a potential bubble in their prices, and this bubble could take the form of an exchange rate appreciation.

This I find entirely natural in that the exchange rate is an important factor in our assessment of future inflation. The overall picture To sum up, the new statistics since June largely support the opinion about inflation prospects that we presented in the latest report. The figures for real economic activity and inflation suggest, if anything, that the path of inflation will be lower than in our main scenario in the June report. If so, however, it is presumably a question of marginal revisions. The exchange rate, however, instead of moving as we predicted, has weakened. The assessment of this tendency and how it should be weighed up with other factors in an overall assessment of inflation prospects is a matter to which the Riksbank will be returning in the next inflation report on September 28th. Concluding remarks Having presented the Riksbank’s picture of current economic developments, I should like to return to the somewhat longer time perspective from the beginning of this talk and take up the issue that is the theme for today’s speakers. Is there room for expansion in the Swedish economy? In doing so I shall concentrate on two fields that are closely connected with monetary policy: the functioning of the labour market and fiscal policy. The economic policy that has been implemented in recent years, with its emphasis on price stability and sound government finances, has had favourable results in a number of respects. High growth has been combined with persistently low inflation.
As regards producer prices of imported goods, these have dropped since the end of 2002. This partly reflects the more or less continuous strengthening of the krona between 2001 and 2004, which has had an impact on the prices with a slight lag. Moreover, consumer price inflation in the international market was muted during the last economic slowdown. We have also seen a rise in the share of imports from low-cost countries, which has also contributed to the low rate of price increases for consumer goods. The effect of this shift towards cheaper import countries is not fully captured, however, by the method that we so far have used to forecast import prices. This could be one reason why our forecasts have not completely managed to predict the fall in import prices. This is a problem that we are working on at the moment. The distribution sector also important for inflation The prices of consumer goods have fallen more than the aggregate producer prices of imported and domestic goods. That is because consumer goods prices, in a second step, are also affected by what happens in the distribution sector, i.e. the part of the business sector that distributes goods from producers to consumers. It is difficult to find comprehensive data for the distribution sector, but we have seen that unit labour costs in the sector that includes transportation fell in 2004.

In our monetary policy assignment of maintaining price stability in Swedish kronor, specified as inflation of around 2 per cent, we need to understand not only cyclical developments but also structural transformations in the economy. This knowledge forms a precondition if we are to be able to make good forecasts and calibrate a well-balanced monetary policy, thereby fulfilling our mandatory task. To make good forecasts, we need models, and models assume that economic relationships are stable. It therefore becomes complicated when structural changes delay or even transform old relationships. If important structural changes have occurred, they turn up as so-called shocks in the models. For example, new and better working methods should entail a positive shock in productivity. Another structural change, for example increased e-commerce, means that competition increases, putting pressure on companies’ profit margins. However, when data on productivity and companies’ profit margins is studied, it is difficult to observe larger changes. Productivity growth in recent years cannot be described as remarkably high. 1 In turn, this has an effect on wage development, which I shall return to. My point, however, is that technological shifts do not necessarily change the way the economy works. But it is nevertheless clear that technological breakthroughs can push forward changes in what have historically been fairly stable operations and open them up for new participants. For example, technological developments in society have contributed to the use of cash, the money the Riksbank offers society, going into decline.
Inflation and monetary policy Instead of using money supply target as an intermediary target, some countries (New Zealand, the United Kingdom and others) aim directly at inflation goals because no sufficiently reliable relation exists between any conceivable intermediate target and inflation. BIS Review 25/1997  - 11 -  This practice has not been adopted in the Czech Republic because in transforming economies the link between the money supply and the price level has some specific features. Everybody agrees with Friedman that inflation is always and everywhere a monetary phenomenon. It means that over the longer term, a general rise in prices is not possible without an undue expansion of the money stock. One of my predecessors in this series of lectures, the former President of the Swiss National Bank, Dr. Markus Lusser, declared in his memorial lecture in 1994 that in Switzerland the time lapse between the introduction of monetary policy measures and their impact on prices is two to three years. BIS Review 25/1997

In this respect, the BWI can play a key role by focusing on their core competencies, – namely surveillance, technical assistance and lending –, and by developing new tools for the analysis of macro-critical issues such as climate change, digitalisation, and inequalities. We should aim at a better coordination between the BWI and other international organisations including UN bodies (UN Development Programme, UN Climate Change Conference, UN Conference on Trade and Development…). Given the insufficient achievement of economic development in Africa and part of South Asia, there is a need to review the functioning of development aid. We could say the same concerning climate change, stronger coordination between UN bodies and the BWI could be achieved, with the latter providing the macro-financial framework needed to assess risks and policies, following the example of the NGFS. ** Let me conclude with the prophetic words of President Roosevelt, during his inaugural address of the Bretton Woods Conference back in 1944: “Economic diseases are highly communicable [and] the economic health of every country is a proper matter of concern to all its neighbors, near and distant; [for that reason] the things that we need to do, must be done – can only be done – in concert”. Most of us could not agree more: the world today needs a new harmony instead of the dissonance of this unruly cacophony. This should be a guiding principle for the next 75 years. With that in mind, I very much look forward to the outcome of your discussions today.
While the merit of what has been achieved should be accorded to many, allow me briefly to acknowledge the work of the staff of the Banco de España, and most specifically the body of bank examiners, economists, lawyers and the senior managers of the supervisory, regulatory and legal arms of the Bank, on whom the greatest burden has fallen in terms of implementing the strategy approved in legislation. The fact is, the task discharged by them has perforce been complex and time-consuming. The decision by the authorities – previous and present alike – to use limited public funds in the reconstruction of the banking system was warranted because the big Spanish banks did not and do not need help and because, given the delicate situation of our country’s public finances then and now, the impact on the markets of a sharp and sudden increase in the budget deficit might have led to the collapse or intervention of the entire Spanish economy, as indeed occurred in some other countries. But with this strategy of minimising the use of public resources, the restructuring work increases exponentially and extends over time. The Spanish supervisor has had no “bad bank” with which to restructure the sector. Here we have not seen a State which, armed with taxpayers’ money, has bought bad assets from banks, thereby resolving all supervised banks’ problems at a stroke. Our Bank’s supervisory team has had to apply a strategy which has obliged it to seek predominantly private solutions.

While we should be proud of our many achievements these years past, we must also be ready to listen to others, particularly and attentively so to the European institutions which, lest we forget, have been buying us time so that we can see through our adjustments. It is not the time for pessimism, but nor is it for complacency. What we must do is fruitfully use the time we have. Thank you. BIS central bankers’ speeches  7
In both the SPD and the SMP, many of the questions are tailored toward matters that are of policy relevance at the time of the survey. Further, we use the fact that the respondents are market professionals with a good understanding of finance and economics to ask direct and at times technically complex questions. In this regard, the surveys contrast with the SCE, which uses language that is accessible to respondents with no economic or financial training.41  37  See Armantier et al. (2016). 38  Using a standard test of the difference between two distributions, the change from September to January is significant at the 1 percent level. The change from April to May has a “p-value” of 16 percent. 39  This dispersion implies that random samples of small size (less than one thousand) will exhibit variability even if the underlying population distribution of inflation expectations remains constant. 40  Correia-Golay, Friedman, and McMorrow (2013) provide an introduction to the SPD. 41  Many surveys of market participants do not use their technical sophistication to the extent necessary to produce robust measurement of expectations. For example, currently many surveys ask market participants to identify the FOMC meeting at which the next increase in the fed funds target range will most likely occur. This question implicitly assumes that the next rate change will be an increase; moreover, eliciting expectations about the most likely meeting when the number of future meetings is large is particularly uninformative.

Marzunisham Omar: Capital flows management for monetary and financial stability Remarks by Mr Marzunisham Omar, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Seminar and Meeting of the SEACEN Expert Group on Capital Flows, Kuala Lumpur, 11 June 2019. * * * I am delighted to be here today. Let me take this opportunity to express Bank Negara Malaysia’s appreciation for the collaborative efforts of the SEACEN Centre and the Bank of Japan that have gathered us here for this biennial SEG event. It has been six years since I last attended the SEG Seminar in Manila, back in 2013 as the newly appointed co-chair. I am truly honoured to have had the opportunity to work alongside Deputy Governor Diwa. Under his capable stewardship and intellectual guidance, the SEG has developed into a beneficial platform for its members since it was established 19 years ago.
Also, if the current expectations for rising interest rates are incorporated, the public debt burden will increase from 2.2% of GDP at end-2021 to 2.7% in 2024. Against this backdrop, allow me to repeat the recommendation I have made on numerous occasions to adopt a medium-term fiscal strategy. This should include immediately setting out a multi-year fiscal consolidation plan for implementation once the economic impact of the pandemic and of the war in Ukraine has been overcome. The plan should have broad  3  A household is deemed to have a high financial burden when its financial expenditure minus financial revenue represents more than 40% of household income. 4  political consensus and be accompanied by an efficiency review of public spending and the tax system, including all tiers of general government. Defining the plan early on would generate greater certainty and trust, which is particularly important against the current backdrop of monetary policy normalisation. The potential impact of the current climate of uncertainty on the banking sector calls for exercising extreme prudence Estimating the impact of the current setting on the banking sector’s profitability and solvency is more complex. First, the rise in interest rates will mean higher returns on new loans and likewise on existing loans at a floating rate. Thus, although the volume of credit will presumably moderate in the current setting, gross income will likely increase, particularly in the near term. However, financing costs will also be pushed up.

Indeed, after the Global Financial Crisis, the US suffered its worst recession since the Great Depression of the 1930s. In a desperate bid to stave off the recession, the US literally moved mountains, including introducing the unprecedented QE policy and splashing out $ trillion between 2008 and 2010 to cut taxes and implement other fiscal policy measures to prop up the economy. However, as we can see from Chart 1, the current recovery has been the weakest of all the economic cycles in the past 55 years. The average growth rate is just 2.2%, half the average rate of 4.6% in the previous recovery cycles. (Chart 1) 5. As for employment, the US has lost a total of 8.7 million jobs during the financial crisis and recession, with the unemployment rate peaking at 10%. Although employment bottomed out in 2010, and some 13 million jobs have been created since then, this only represents 4.3 million more jobs compared with the peak eight years ago in early 2008, and way behind the 8.8 million people who have been added to the labour force over the same period. In other words, while the US unemployment rate has declined to 5% recently, it does not mean the labour market has fully recovered. One of the main reasons for the faster-thanexpected drop in the unemployment rate is the dwindling labour force participation rate, from an average of 66% in 2007 to the current 62.4%, the lowest since 1977.
Just how sustained this pick-up proves to be will become evident in the coming months when the extraordinary fiscal and monetary stimuli weaken. Foreign exchange markets Fluctuations in the US dollar dominated the foreign exchange markets. After having lost considerable ground during the first half of the year, the greenback rebounded slightly by October amid growing signs of an acceleration of growth. Recently, the focus of market participants returned to the sustainability of the US recovery and the continued rise in America’s current account deficit. As a result, the dollar weakened again (see graph 2). Since the middle of the year, the Swiss franc has moved sideways against the euro. Heavier fluctuations were recorded vis-à-vis the dollar. With positive economic data emanating in the US from June onwards, the franc initially weakened before firming again as part of the general dollar consolidation witnessed since September. On the whole, the Swiss franc hardly registered any independent movements. It depreciated strongly during the first half of the year after our interest rate decision and has remained stable since the summer. In relation both to Switzerland’s 24 major trading partners and to the euro zone, the real exchange rate index of the Swiss franc is now slightly below its level at the beginning of 1999, i.e. at the time of the euro launch. Gold market Owing to the more favourable economic situation, raw material prices continued the rise which had started in 2001.

The three-month Libor remained almost constant at 0.25%. The global trend in capital market yields was chiefly determined by long-term yields in the US, which themselves were shaped by the recovery of the US economy. In the early summer, deflation fears had dragged the yield on ten-year US government bonds down to 3.1% - a level last reached at the end of the 1950s. In July and August, however, positive economic data pushed the yield right up to 4.6%. Convexity hedging was one of the factors contributing to the unusual scale of the turnaround. As interest rates fell in the early summer, the refinancing of existing mortgages - which is possible in the US at any time - had triggered extensive buying of government bonds. US investors holding substantial mortgage portfolios had to make these purchases in order to keep the residual maturities of their portfolios constant. When interest rates rose, therefore, the correction was similarly swift. In September, increasing doubts were voiced as to the sustainability of the economic upswing in the US:  BIS Review 58/2003  1  compared with earlier cycles, the essential element of an improving labour market was missing. This led to a consolidation on the capital markets even though the economic indicators remained largely positive. With the first signs of the US labour market recovering at the end of September, coupled with rapid growth in gross domestic product in the third quarter (8.2%), the strength of the economic revival in the US economy was confirmed.