samchain/econo-pairs-v1 huggingface dataset:
Although the main determinants – such as the behaviour of employment – will not be favourable, the high level of the household saving rate makes it conceivable that, if the factors of uncertainty were to progressively dispel, consumption might recover significantly. The main factor underpinning activity in 2010 should therefore be the external sector. The fact that the recovery in the Spanish economy lags that in the other European countries somewhat may provide for more expansionary behaviour of exports, whose trajectory has been reasonably positive. Foreseeably, then, a gradual growth phase based on recovery in the external sector and on the progressive extension of its impulses to business investment and employment will begin over the course of next year, laying the bases for a demand-led expansion. However, as a result of the spillover effect of the negative 2009 rates, average growth in 2010 might post a moderate decline. This trajectory of slow recovery in activity broadly matches the government’s macroeconomic projection that acts as a basis for the State Budget for 2010. Yet as I said, there is a risk that business investment may perform somewhat worse than foreseen in this scenario. But in my view, what is most important at present is not the exact date on which activity will begin to post a positive rate or whether its rate of increase will be greater or less than forecast in 2010; rather, it is the scale of the medium-term challenges involved in exiting the most complicated situation the Spanish economy has faced in recent decades.

The strong adjustment in spending is also manifest in a rapid reduction in the external deficit, which may have halved by 2009 from its level of close to 10% of GDP in 2007. Ideally, however, the spillover effect of the weakness of national demand on imports should be reinforced by a strengthening of the export base through the improved competitiveness of our companies. But we should not lose sight of the fact that the correction of these imbalances is coming about through a severe contraction in output that is exerting a most adverse effect on employment, as a result of the problems present in the functioning of the labour market, and on public finances. Job destruction, which was concentrated in the second half of 2008 in construction, subsequently spread both to industry and to market services, affecting temporary contracts most especially. After the sharp drop in employment in the closing months of 2008 and early 2009, the pace of job destruction has slackened, largely due to the effects of the launch of the Local Investment Plan. And since the dynamism of the labour force has held up well into 2009, the unemployment rate has skyrocketed from 8% in 2007 to almost 18% in the second quarter of the current year. The sharp employment adjustment has prompted a rise in apparent labour productivity from a rate below 1% in 2007 and the previous years to more than 3% in the second quarter of 2009.
18 The Bank plans to use its Agency network to run a survey of hurdle rates later this year. Conclusion What would Alastair have made of the issues I have raised today? He knew well the risks that property markets can pose to stability. I hope he would be reassured by the creation in the UK of the Financial Policy Committee within the Bank of England which is now specifically charged with managing these systemic risks. The Committee is monitoring property markets closely. It has already taken action and would not hesitate to do so again if it is needed to protect financial stability. Alastair was also a champion of investor activism. I think investors have a role to play in restoring the economic profitability of banks, both by encouraging business model restructuring and monitoring risks and perhaps by lowering their expectations a little as well. But investors are only one part of the story. Banks need to work with the authorities to implement fully the reforms that have been agreed to boost their resilience. And banks’ management need to maintain their restructuring momentum. The business model for banks in the UK may look very different in the future than it did before the crisis. I think it is clear that, in the new framework, it is possible for banks both to lend to the real economy and to make adequate returns. Thank you. References Bahaj, S, Foulis, A and Pinter, G “The Residential Collateral Channel”, by, Bank of England Staff Working Paper, forthcoming.

Jean-Pierre Roth: Heading for more sustained growth? Summary of an address by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the General Meeting of the Swiss Italian Chamber of Commerce, Zurich, 20 June 2006. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Lately, Switzerland has been experiencing an encouraging upturn in the economy on the back of growth in the international economy. This development is particularly welcome because it follows a number of years of economic listlessness which have prompted repeated criticism from international bodies, due to the lack of growth in the Swiss economy. However, Switzerland's medium and long-term growth problem has not disappeared. Faster economic growth is the only possible response to the challenges posed by an ageing population. Moreover, it is the sole antidote to Switzerland's continuing loss of ground with respect to the other members of the OECD. Reforms are needed to ensure that, in the future, we can achieve more with fewer resources. The ways and means of doing this are evident. The Federal Council's package of growth measures is a move in the right direction, and the current improvement in the economy gives Switzerland the opportunity to move ahead with the requisite reforms. BIS Review 59/2006  1
Alberto G Musalem: US macroeconomic and regulatory developments and emerging market economies Remarks by Mr Alberto G Musalem, Executive Vice President of the Integrated Policy Analysis Group of the Federal Reserve Bank of New York, at the International Financial Conference Annual Meeting, Cartagena, Colombia, 9 March 2015. *  *  *  Thank you for the invitation to speak here today. It has been a pleasure to attend this conference, and to have the opportunity to exchange views with many of you. My remarks today will focus on the potential effects of the U.S. outlook and policy for emerging market economies. I will make three main points. •  The U.S. economy appears likely to make further progress toward the Federal Open Market Committee’s (FOMC) objectives of maximum sustainable employment and price stability. This actual and prospective improvement underlies market expectations that the FOMC will begin raising the Federal Funds rate sometime later this year. •  Emerging market economies (EMEs) have generally performed well during U.S. tightening cycles, especially when such policy shifts are supported by effective communication in the context of U.S. growth. •  There has been notable progress in improving the safety and soundness of the international and U.S. financial systems, to better support financial stability and economic growth. Before I turn to the specifics, let me remind you that what I say today reflects my own views, and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System.

Interpreted broadly, this can include relatively simple indicators, such as interest rates, interest rate spreads, and returns. They include other measures related to the value of financial or tangible assets like bonds, stocks, housing, and gold. And of course they also include more sophisticated, data-intensive estimates of risk, which we hope to discuss today. For central banks, one of the main questions that arises is whether financial market indicators are useful in setting monetary policy. And if so, which ones are most useful for central banks, and for what purpose? In general, financial market indicators are used by central banks to: (1) gauge market sentiment with regards to expected changes to policy variables; (2) identify types and sources of shocks to the economy; and (3) predict future developments in economic activity and inflation. Such predictions of longer-term inflation are also useful in checking how markets view the credibility of the authorities’ commitments to their final price target. So financial indicators can be used to double check econometric and judgmental predictions as well as flag a problem of asset price misalignment, which may need to be addressed by policy. In addition, financial market indicators have the potential to reflect developments at critical stages of the transmission process. This is due to the fact that financial markets in general adjust faster than goods markets, and their prices are timelier and less prone to measurement error. Today’s workshop will give us the chance to discuss these and many other issues.
24 The students were then given more information on the case study and asked to answer further questions with a confidence rating. He found that additional information did nothing to improve the accuracy of the students’ answers. It did, however, cause the confidence rating they attached to these answers to rise significantly. The addition of information and experience led students to become overprecise, to over-estimate their abilities, to over-state their performance. There is no shortage of casual evidence of such hubris or over-confidence biases. 90% of faculty at the University of Nebraska rate themselves as above-average teachers. 25 Over 90% of US students rate themselves as above-average drivers. 26 And over 80% of Frenchmen rate themselves to be above-average lovers. 27 Over-confidence biases have been widely studied in politics and management. There is a degree of Darwinian self-selection at work here. Over-confident individuals tend to outperform in tournaments. This means they are more likely to occupy positions of influence in the first place, whether Prime Minister or CEO, though not Chief Economist. 28 But the same factor that pushes these individuals to the summit may also push them over the edge. Over-confidence increases the risk of over-reach – for example, pursuing overambitious targets or undertaking over-complex company takeovers, generating an aboveaverage risk of systemic failure. That is why nemesis is often thought to follow hubris. What is true of those managing countries and companies appears to be no less true of those managing money.

It has been argued that targeting a 2% inflation rate results in this zero bound constraint binding too frequently, inhibiting the effectiveness of monetary policy. 47 A higher target would loosen that constraint. This academic debate may run for some time. On the financial stability side, the position is less straightforward. There is no single, easily observable or quantifiable target for systemic risk against which to hold the FPC and PRA to  45  Bernanke and Mishkin (1997) first coined this term in the context of inflation–targeting. 46  Shiller (1997). 47  Ball (2014). BIS central bankers’ speeches  7  account. And the public at large often do not have well-defined or strong attitudes towards financial stability – except, perhaps, when things go wrong. Since 2012, the Bank has been surveying the general public on how they believe the Bank has performed in protecting the financial system. Some reassurance can perhaps be taken from the fact that this has moved from a net dissatisfaction score of 13 in 2012 to a net satisfaction score of 40 today. 48 Nonetheless, by itself this approach falls well short of having a clear objective against which the FPC and PRA can periodically be assessed. The FPC has begun publishing a set of financial stability indicators against which it assesses systemic risk and is held to account.
“The Phillips curve: lower, flatter or in hiding?”, speech at the Oxford Economics Society, 14 November 2017. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 4: The wage Phillips Curve Wage growth (per cent)  1971-1997  35  1998-2012 30  2013-2017  25 20 15 10 5 0 -5 3  5  7 Unemployment (per cent)  9  11  I want to use my speech today to focus on the implications of the UK’s unusual economic position for inflation and for monetary policy, both in terms of what has happened over the recent past and of what I expect to happen in future. I will focus on three aspects of the economy in particular. First, the ongoing consequences of the vote to leave the EU, and what those have meant and could mean in future for monetary policy. Second, the continued evolution of the labour market and how I expect that to affect inflation and monetary policy in future. And third, developments in the economy at the start of this year: the unexpected weakness of GDP and evolution of inflation. These aspects of the economy are unusual in terms of what they imply for the UK outlook. But as a policymaker I feel reasonably confident, even with the uncertainties, that, together with my colleagues on the MPC, I have a reasonable understanding of what’s going on, and in particular what the implications are for inflation.

6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Chart 5: Brexit as a source of uncertainty Aug-Sep 2016 Feb-Apr 2017 Aug-Oct 2017 Feb-Apr 2018  9  Share of respondents (per cent) 50 40 30 20 10 0  Not important  One of many sources 2 or 3 top sources  Top source of uncertainty  On the demand side, while Brexit did not lead to an immediate fall in GDP, it is nonetheless exerting a drag. In addition to its effects on investment, it has had a significant impact on real household incomes and therefore on consumption. The main vehicle for this impact has been the fall in the exchange rate, which remains some 15% below its pre-referendum peak. The rise in import prices caused by sterling’s depreciation has had a material and persistent effect on incomes: real household income has only risen by 0.2% in the seven quarters since the referendum, compared with averaged growth of over 1½ % per year in the five years prior to it (Chart 6). Given that slowing in real income growth, you could argue that it’s surprising that households haven’t adjusted consumption even more. Consumption growth has certainly slowed: it has averaged around 0.3% per quarter since the referendum, compared to 0.6% in the previous five years and nearly 0.9% in the pre-crisis decade. But households have also in aggregate reduced their savings – the household saving rate has fallen by some two per cent of income (Chart 7).
Which countries will be included? The EU countries are now striving to fulfil the economic criteria for participation in the euro area. This is being accompanied by strenuous political efforts to remove any remaining obstacles. Today I can only say that it is not until the spring of 1998 that we will actually know which countries will be establishing the union. The EMI and the Commission will each be publishing a report and the Commission will issue recommendations on which countries should participate. On the basis of these reports and recommendations, the opinions of the European Parliament and the national parliaments are to be heard, which is expected to occur in April. The decision about which countries will participate is to be taken around the turn of April at a weekend meeting of the Ecofin Council and the Heads of State or of Government. It is therefore unnecessary to speculate about this today. As far as Sweden is concerned, it looks as though we will in fact fulfil the convergence criteria. Whether or not we participate will therefore depend on the decision by the Riksdag (Sweden's parliament). What is the Riksbank doing? The Riksbank has to contribute to a situation whereby Sweden is able to participate in practice if a majority in the Riksdag so decides. That is why preparations are already necessary. A basic principle in this work is that it shall be voluntary - the requisite adaptations are a matter for each organisation to decide.

It became clear that the crisis severely aggravated the ongoing economic downturn, which together with falling commodity prices had a considerable dampening effect on inflationary pressures. Both we and others assessed that a rapid and substantial interest rate cut was necessary to alleviate the effects of the crisis. On 8 October the Riksbank and several other central banks, including the Bank of England, the ECB and the Federal Reserve, decided to cut our policy rates in a joint action. This action has later been followed by several interest rate cuts by central banks around the world. Last week, for instance, the ECB cut its policy rate by half a percentage point and the Bank of England cut its rate by 1.5 percentage points. The most recent interest rate decision Just over two weeks’ later, at the monetary policy meeting held on 22 October, the Executive Board of the Riksbank decided to cut the repo rate by a further 0.5 percentage points to 3.75 per cent. In our forecast for the future repo rate we are also expecting that it will be necessary to cut the rate by a further 0.5 percentage points within six months. The purpose is to alleviate the effects of the financial crisis on production and employment, and at the  BIS Review 138/2008  5  same time to attain the inflation target of 2 per cent.
This has led to an increase in short term inflation forecasts by 0.6 points (Table 1). The assumptions about fiscal policy used for medium-term forecasts were based on the outlook presented in the Medium Term Program (MTP). Therefore, the baseline scenario envisages that the ratio of primary expenditures to GDP would gradually be reduced from 2012, the public debt-to-GDP ratio would continue to fall, and the risk premium would remain broadly unchanged. Moreover, tax adjustments and administered prices are assumed to be consistent with inflation targets and automatic pricing mechanisms. Distinguished Members of the Press, As I have already stated, since the publication of the July Inflation Report, emerging economies have faced rapid capital outflows due to the deteriorating risk appetite. In this respect, excessive depreciation in the Turkish lira has become more evident. This development, coupled with the increase in prices of administered goods, has raised the risk of deterioration in pricing behavior. We responded to these developments strongly by increasing our overnight lending rate markedly in our October meeting (Chart 6). We expect monetary tightening to contain inflationary pressures in the period ahead. However, inflation is forecasted to increase significantly in the short term with the contribution from low base effects in unprocessed food prices.

I would like to reiterate that we will not allow these developments to affect medium-term inflation expectations and the medium-term inflation outlook adversely. Indeed, we have already started the necessary monetary tightening to keep inflation under control and to ensure that inflation realizations remain in line with the target set for 2012. Details on this issue can be found in the Inflation Report that I will summarize shortly. Secondly, I will talk about our interest rate policy. After the last Committee meeting, banks’ funding costs from the Central Bank were set within the interest rate corridor, in other words, between 5.75 and 12.5 percent on average, or at a level that the Central Bank considers appropriate. In cases where funding is effected at 12.5 percent, the Central Bank will meet banks’ demand with no upper limit and against eligible collateral. Tightening or easing to be achieved via the funding channel will be implemented even on a daily basis depending on the course of economic and financial developments. In the event that risks to price stability are observed, the Central Bank will allow banks’ overnight borrowing rates to hover around 12.5 percent for some time. Thirdly, I will provide you with some information about our reserve requirement policy. Depending on the outcome of the EU Leaders Summit and the foreign markets’ perception of this outcome, the Central Bank may introduce a limited reduction in the Turkish lira required reserve ratios if deemed necessary.
These twin deficits have not, so far at least, had especially serious consequences for central banks. There has been no de-anchoring of inflation expectations. There has been no rolling-back of central bank responsibilities nor systematic retreat from central bank operational independence on monetary and regulatory matters. If anything, central banks’ sets of responsibilities have recently been added to. At the same time, more questions are probably being asked about the role and powers of central bank than at any time in a generation. That is in part a reflection of the increased responsibilities central banks have been handed; in part a reflection of the higher expectations being placed on central banks’ actions; and in part a reflection of the dent in trust in institutions the crisis has delivered. This is a triple challenge. A year ago, the Bank of England hosted a conference to mark 20 years since it was granted operational independence for monetary policy. At that event, I was struck by the number of speakers calling time on the  13  For example, Gürkaynak, Sack and Swanson (2005), Gürkaynak, Levin and Swanson (2010), Berger, Ehrmann, and Fratzscher (2011). 14 Bank of England Inflation Attitudes Survey, currently run jointly with TNS. 15 The same survey also gives the “Bank of England” as option to the question of which group sets interest rates. More respondents identify the Bank of England as being responsible for setting interest rates (around 30%) than the Monetary Policy Committee, but this too has been broadly flat over time.

This is a clear example of how we are harnessing the advances made by the leading institutions within the industry. Furthermore, to encourage those institutions which are not at the leading edge in this field to make enhancements in their internal controls and risk management processes, the New Accord will offer explicit economic incentives to adopt - over time - more accurate measures of risk and more sophisticated means for controlling their exposures to such risks. However, the Basel Committee recognised that relying on uniform rules alone would have introduced certain drawbacks. Rules tend to be inflexible and therefore might preclude or ignore innovation. Applying uniform rules may also fail to account for a bank’s unusual businesses or risk profiles. Consequently, our second pillar, supervisory review, addresses some of those drawbacks. It introduces judgement into the policy mix. Banks and supervisors will exercise discretion in determining capital needs relevant to their particular businesses and risk profiles. That degree of discretion makes the supervisory framework more flexible and better able to adapt to change and innovation. Finally, the third pillar, market discipline, adds greater transparency to the process. When a bank discloses information that offers meaningful insight into its risk positions and exposures, marketplace participants are better able to assess its financial health. Counterparties, investors, rating agencies, and even customers can reward banks that manage their risks properly and penalise those that hold unrealistically low amounts of capital for their risk.