samchain/econo-pairs-v1 huggingface dataset:
Domestic fixed  2/7  investment provides a return in the form of higher production capacity in the future. Building up financial assets abroad allows us to pay for more imports in the years ahead. In the past few years, there has been a sharp increase in Norway’s saving, as conventionally measured in the national accounts. As a share of GDP, Norway’s saving after the turn of this century has been almost double the average for the 1980s and 1990s. The explanation for these figures lies in the Government Petroleum Fund. Norway’s petroleum resources are in principle part of our national wealth, but are not recorded as such in the national accounts. When oil is extracted and sold, natural assets are transformed into financial wealth. As long as this financial wealth continues to grow, it will appear as government saving in the accounts, while it is in reality a conversion of wealth. In this sense, we are not saving so much more than we used to. Nevertheless - when households see that the state, which has undertaken substantial pension obligations, puts money aside, some may perceive this as a guarantee for their own pensions. This may influence their own private saving decisions. The value of the Petroleum Fund, measured as a percentage of GDP, will rise in the years ahead. On the other hand, Norway, like many other countries, is facing substantial fiscal challenges. The expected dependency ratio, i.e.

Strengthening the role of Shariah scholars The Islamic financial landscape today has undergone various transformations and progress over the last 10 years. This transformation can be testified in the increase of global banking assets that had reached nearly USD1.5 trillion, total outstanding sukuk amounting to USD295 billion, Islamic fund assets amounting to USD76 billion as well as the takaful contributions of USD21 billion (Source: IFSB: 1H 2014). In addition, there has been a marked increase in the participation from non-Muslim jurisdictions in Islamic finance, particularly in sukuk issuances, reflecting the increasingly positive reception of Islamic finance among the global community. The sukuk instrument, in particular, is among the most innovative instruments and favoured by governments and multinational corporations. In response to these developments, the role of and the expectation on Shariah scholars will be more challenging in finding solutions to emerging new Shariah issues that require immediate responses from the Shariah fraternity. To me, changes in the Islamic financial landscape should be viewed as a golden opportunity for the Shariah experts to demonstrate the dynamism of the Islamic religion as perpetually modern and evolving through time. Therefore, it is my hope that the role of the Shariah scholars could be further enhanced and not confined solely to only ensuring and monitoring the Shariah compliance aspects. In relation to this, I am also of the opinion that researches and thorough deliberations on Shariah need to consider other fields of disciplines in order for the ijtihad (reasoning) or Shariah decisions to be comprehensive, inclusive and practical.
A few years of slower growth will also have a favourable effect on price and wage inflation in Norway, and thereby on the more long-term growth capacity of the economy. Norges Bank’s projections indicate that price and wage inflation could drop to the level of our trading partners after the turn of the millennium. Lower domestic demand will also contribute to curbing the strong import growth recorded in recent years, thus improving the current account. As mentioned, forecasting is a challenging task when the economy is on the verge of a turnaround. It is not easy to predict the exact timing of the turnaround. It will be difficult to avoid some adjustment through a slackening in the labour market. Even if there are already signs of some slackening, we must bear in mind that the market is still very tight. A moderate wage settlement this spring – with the social partners taking future developments into account – may contribute to maintaining the level of employment. Monetary policy instruments are oriented with a view to returning the krone exchange rate over time to its initial range. The guidelines provide considerable scope for discretion in the conduct of monetary policy. It is Norges Bank’s task to exercise this discretion. A precondition for maintaining a stable exchange rate against the euro is that price and wage inflation is on a par with that of euro countries over time. When the krone exchange rate is weak, Norges Bank therefore sets the interest rate with a view to low price inflation.

9) Formulation of monetary policy Norges Bank reduced its key rates by 0.5 percentage points effective from today. This decision came in response to developments in money and foreign exchange markets and the prospect of reduced pressures in the real economy. The outlook for the Norwegian economy has changed since Norges Bank raised its key rates in August. The forecasts for growth in the world economy have been revised downwards and persistently low oil prices have reduced demand in the oil sector. In addition, a tight government budget for 1999 and the high interest rate level are having a restraining effect on growth. At the same time, the krone has appreciated recently. This lays the foundation for slower price and wage inflation in the years ahead, as estimated by Norges Bank in its December Inflation Report. Developments in recent weeks have confirmed this picture, providing room for a slight reduction in interest rates. According to the Exchange Rate Regulation, “... in the event of significant changes in the exchange rate, monetary policy instruments shall be oriented with a view to returning the exchange rate over time to its initial range”. The guidelines provide considerable scope for discretion in the conduct of monetary policy. It is Norges Bank’s task to exercise this discretion. Interest rates are set with a view to returning the krone exchange rate over time to its initial range. Even with this interest rate reduction, the interest rate differential against European countries is substantial.
So personally I do not think it has always been hard to understand the direction, upwards or downwards, of exchange rate movements in recent years. It is the tendency for the krona’s average value to be unduly low that has been more difficult to interpret. To some extent, this has presumably been a consequence of the American dollar being generally over-valued against European currencies. I also believe that some part may have been played by various structural factors, for example the construction of the tax system, the internationalisation of the corporate sector with the attendant relocation of certain functions, the status of the Swedish krona as the importance of the euro grows in Europe and so on. Some of these notions are supported both by arguments from principle and by somewhat anecdotal information. There is reason to believe, for instance, that the taxation of both capital gains and wealth has had effects. Moreover, at least a part of the residual item in the statistics could have to do with a tendency for firms not to repatriate export receipts to the same extent as before, which in turn may be a consequence of a larger proportion of their central functions now being located abroad. But we do not know how quantitatively important these factors are and I believe that perhaps one should be wary of exaggerating them. Still, these are questions that deserve further scrutiny and we intend to pursue them.

To begin with this was perceived as just a temporary dip - a blip in the stocks cycle, a minor adjustment in the IT sector or something else. But stock markets seemed to be clearly over-valued and it would have been odd, particularly after such a long upward phase, if this had not led to a certain amount of overinvestment. There were also clear signs of insufficient saving, particularly in the United States. Consequently there were grounds for believing that once a slowdown had started, it could prove to be both relatively deep and long. Against this background, in the March Inflation Report we talked not so much about a V-shaped path as a U-shaped one or a “banana”. Since then the outlook has become darker but more of that later. For monetary policy, turns in the business cycle are not inherently a major problem, apart from the difficulty of foreseeing them. Falling resource utilisation, for example, should normally led to lower inflation in the future. That in turn can pave the way for interest rate cuts. In the past year, however, things have not been quite as simple as that. Two partly interrelated factors have contributed to this. One is inflation, which has been higher than expected and also above our target. The other is the exchange rate, which has been weaker than anticipated and also weaker than the real economy warrants. During a period in the late spring, moreover, the krona fell rather uncontrollably in the absence of similar movements in other currencies.
Lower variability in output growth and inflation, lower inflation persistence, apparently weaker pass through of demand pressures – all told, this points to the importance of identifying and understanding the complex combination of structural changes affecting our economy. Today, I plan to give a broad overview of some of them, as they confront policymakers. Our standard tools of economic analysis – in particular, statistical modelling – are not especially well-suited to real-time detection or quantification of the underlying forces of change. They can, though, alert us to puzzles when the data persistently deviate from past patterns. Business managers, by contrast, are exposed to the reality of change day by day. Unable to shield yourselves from change, businesses can indeed succeed by embracing it – shaping your environment as well as responding to it. That underlines the value of the Bank’s dialogue with business, facilitated and led by our regional Agents across the UK. Colloquially, you enrich our grasp of what is ‘going on out there’. 1  My thanks to Peter Andrews, Ian Bond, Spencer Dale, Neal Hatch, John Whitley and Tony Yates for comments; to Damien Lynch for comments and research and to Sandra Bannister for secretarial support. 2  Benati L. (2004), ‘UK Monetary Regimes and Macroeconomic Stylised Facts’, mimeo, Bank of England. BIS Review 16/2005  1  Economic analysis then helps us to match your various real-world stories to puzzles we see in the data.

Chart 8: Proportion of part-time workers  Percentage of total employed 30 25 20 15 10 1985  1988  1991  1994  1997  2000  2003  Source: ONS and Bank calculations  BIS Review 16/2005  11  Chart 9: Real household disposable income growth and terms of trade  Percentage change on a year earlier 8.0  1990 = 100 112  Real household income growth  6.0 108  4.0 2.0  104  0.0 100  -2.0  Terms of trade  -4.0  96  -6.0 -8.0 1990  92 1992  1994  1996  1998  2000  2002  2004  Chart 10: Margins on personal loans to households  Per cent 10.0 8.0 6.0 4.0 2.0 0.0 1993  1995  1997  1999  2001  2003  Source: Bank calculat ions.
Also, private consumption has increased in line with the significant increase in personal income. Still, we face significant risks, which I will look in more detail in a moment. Those coming from abroad have to do with the world economic situation I just described; domestically, they relate to the possibility of an exacerbation of output and expenditure. Beyond these risks, in the baseline scenario that today we believe to be the most likely, the Chilean economy will resume growth in line with the trend, while inflation will gradually return to levels that are consistent with the target. Let me now describe this scenario and the risks we have identified. Macroeconomic scenario The macroeconomic scenario facing the Chilean economy has not changed significantly in the past several months. As I just said, Chile’s output, and especially domestic demand, has grown above expectations. Some progress has been made abroad, but the risks derived from the Eurozone crisis are still present. In this context, headline inflation has fluctuated substantially in recent months, due to one-time events associated with supply shocks. Core inflation – discounting foodstuffs and energy – has declined slightly to near 2 percent y-o-y. The Board, continuing with what has been the tone throughout the year, held the monetary policy interest rate at 5 percent. Domestic situation As of November, y-o-y CPI inflation was 2.1 percent, after rising to almost 3 percent in October (figure 1). Y-o-y growth in nominal wages has remained roughly constant in the 6% to 7% range, although with differences across sectors.

At the same time, there is great uncertainty surrounding fiscal policy as there is a political deadlock between the Democrats and the Republicans in Congress that may remain after the presidential election in 2012. The uncertainty has caused analysts to talk about the US economy facing a fiscal cliff next year. The concern applies on the one had to whether earlier income tax cuts and reductions in payroll taxes will be extended beyond the end of the year, and on the other hand is linked to the automatic expenditure cuts that will come into force at the turn of the year unless Congress can agree on long-term sustainable budget consolidation. All in all, these automatic tax increases and cuts in public expenditure entail a tightening during 2013 of 3–4 per cent of GDP. A further element of uncertainty is the result of the presidential election in November. If the results of the election are inconclusive and no party gains a clear majority, there is a major risk that the political deadlock will persist. The lack of credible budget solutions at present, and the low confidence in the political system’s ability to deal with the fiscal policy challenge, could led to companies and households beginning to act with greater caution. This would subdue growth in the world economy. We have given consideration to these risks in our forecast, but it is of course possible that the situation will be more problematic than we have assumed. Realistic to believe in an orderly resolution of the euro crisis?
Employment developments were also influenced by substantial labour inflows from central Europe following EU enlargement in 2004. Strong growth in labour productivity is not due to any substantial increase in the real capital behind each hour worked, but is related to a considerably more efficient utilisation of labour and capital. In addition, growth in labour productivity reflected a marked fall in sickness absence in 2004. The national accounts show more moderate productivity growth in recent quarters. However, since the figures are provisional and can often be revised considerably, we should be cautious about reaching any conclusions. The strong rate of growth has only to a limited extent fed through to a higher rise in prices for consumer goods and services. The rise in prices has none the less accelerated in recent months. In August, the year-on-year rise in the CPI-ATE was 1.8 per cent. Underlying inflation has long been projected to be between 1½ and 2 per cent in the second half of this year. The year-on-year rise in the total consumer price index (CPI) has been just under ½ per cent in recent months. This is because electricity prices have been substantially lower this year than in 2006, when unusually high electricity prices due to low precipitation levels pushed up the year-on-year rise in the CPI close to the inflation target. In recent months, electricity prices have been at their lowest level since 2002.

This is because long-term lending is inherently riskier than short-term lending, as short-term interest rates (and, hence, the opportunity cost of long-term lending) may perform quite differently to what was previously anticipated by market participants. By p urchasing government bonds in secondary markets, the central bank absorbs part of that long-term risk, through what is called the duration extraction channel. This leaves less duration risk for private markets to absorb, so the term premium falls, driving down the long-term interest rate. Third, there is the risk that a bond issuer will default on its future payment obligations, and investors demand a default premium to compensate them for this risk. As in the case of the term premium, central bank purchases shift this risk from private investors to the central bank, which reduces default premium and, therefore, yields – a channel called default risk extraction. All three of these asset purchase channels reduce long-term rates and thereby stimulate the economy. Indeed, according to many empirical studies, the ECB's APP made a significant contribution to boosting euro area economic activity and supporting the convergence of inflation to its aim. 6 The existing evidence also shows that in the case of PEPP 7 - that was designed to permit flexibility in the allocation of purchases across jurisdictions, as well as  6  A number o f academic studies have examined empirically the effects o f this unconventional po licy.
These projects are often felt to yield the highest long-term (private and social) returns and hence offer the biggest boost to future growth. That makes short-termism a public policy issue. But what would be an appropriate public policy response to this capital market failure? A number of proposals have been suggested by various authors. These include: (a)  Transparency: The lightest touch approach would be to require greater disclosures by financial and non-financial firms of their long-term intentions – for example, their long-term performance, strategy and compensation practices.26 For financial firms, this might include metrics of portfolio churn. This could be accompanied by a programme of educating managers, investors and advisors of their fiduciary responsibilities. (b)  Governance: A more intensive approach would involve acting directly on shareholder incentives through their voting rights. For example, fiduciary duties could be expanded to recognise explicitly long-term objectives.27 More concretely, shareholder rights could be enhanced for long-term investors, perhaps with a duration-dependent sliding scale of voting rights.28  (c)  Contract Design: There have been various attempts over the past few years to make compensation contracts more sensitive to long-term performance and risk. This includes employment contracts conditioned on long-term performance, or with deferral or clawback.

For Mr Keynes and the Classicists, they would have been anything but.13 For example, an early set of papers found “excess volatility” in asset prices relative to future dividends and earnings.14 Investor myopia was one interpretation, with too great a weight on near-term dividends causing even transitory changes to affect valuation.15 Using an augmented version of this basic asset pricing framework, Miles (1993) tested formally for excessive discounting of future cash-flows using company-level equity price data from the UK between 1980 and 1988, finding evidence of short-termism over this period. Similar approaches applied to longer time-series across a range of countries reached broadly similar conclusions.16 Yet, latterly, the quantitative evidence appears, as in the mid-1970s, to have dried up. This time the efficient markets hypothesis cannot be held responsible, for it has come under increasingly critical scrutiny. Instead we have seen scraps of evidence drawn from the types of surveys familiar from the 1960s. For example, among asset managers, a 2004 MORI survey of members of the Investment Managers Association (IMA) and the National Association of Pension Funds (NAPF) asked if investment mandates created short-termism. A third of NAPF members and two-thirds of IMA members agreed. In 2006, a CFA (Chartered Financial Analyst) symposium of financial institutions concluded “the obsession with short-term results by investors, asset management firms, and corporate managers collectively leads to the unintended consequences of destroying long-term value, decreasing market efficiency, reducing investment returns, and impeding efforts to strengthen corporate governance”. Echoes, here, of Graham’s anti-social voting machine.
In case of Estonia, our earlier policy choices have resulted in an environment characterized by the openness of the economy - export and import reaching 179-180% of the GDP, by a stable fixedexchange-rate, by a long tradition of balanced fiscal stance and rapid integration with the European markets - all of them features favourable to a relatively rapid real convergence. We could even say that the convergence that presently takes place in our real economy takes place in a de facto EMU environment. 2  BIS Review 42/2003  According to an analysis recently conducted by the ECB, the correlation of manufacturing industries' business cycles between Estonia and the five larger EMU member countries is even higher than that for some of the present member countries, the correlation of overall economic cycles is slightly lower but that is due to the more rapid economic growth in Estonia compared to the euro area. But there is one more important aspect I would like to stress in this context - and that is the crucial role of the financial system in real convergence under a currency board based fixed exchange rate regime. It is fair to say that Estonian banking system is presently strong, well capitalized and liquid. The banks' forced reliance on their own capital and liquidity has had a direct impact on the market structure. Strategic foreign ownership - mostly by Scandinavian financial groups - has provided Estonian banks with both strong capitalization and transfer of international best practices.

We have systematised our judgement so that it is possible for others to determine whether the bank’s assessments seem reasonable. The assessment of risk is linked to six factors that are important for 4 price inflation. Our assessment of risk associated with each of these factors is formulated as a probability distribution around the projection for the variable in question. The assessment of risk associated with the actual inflation projection emerges as a weighted average of these six distributions. The weighting of each factor reflects its significance to developments in price inflation as this emerges in our model. Weighting is heaviest and approximately the same for domestic private demand, wage growth, growth in public expenditure and developments in the global economy. The weighting for exchange rate and oil price is somewhat lower. The chart shows our assessment of the balance of risks associated with estimated wage growth as it was presented in the Inflation Report 3/2001. We estimated 5 per cent wage growth in 2003. At the same time, we said that the probability that wage growth would be higher than projected was greater than the probability that it would be lower. We could present similar charts for the other five factors. The ”fan” for the inflation projection is a topographical map of the overall assessment of the balance of risk. 4  The risk model is discussed further in “Box: Assessment of risk to the inflation projection”, Inflation Report 2/2001, Norges Bank.