samchain/econo-pairs-v1 huggingface dataset:
The minority negative or not statistically significant coefficients could be attributed to the low number of observations, as well as to various specific factors that temporarily interrupted the positive and strong relation between cumulative real wage gap and inflation gap. The estimated coefficients of cumulative real wage gap using the log-normalized data point to robust results and are more meaningful for policy makers. Results show that an increase/decrease of cumulative real wage gap by 10% led inflation gap to rise/deepen by 0.561% during the first wage adjustment episode, by 0.846% during the second wage adjustment episode and by 0.454% during the third wage adjustment episode. We deepen the robustness check analysis and test if the inflation gap accelerates after the cumulative real wage gap closes. In that respect, we estimated the slope of the post-crisis Phillips Curve before and after the cumulative real wage gap was closed. The results in the standard method, as well as the log-normalized method are presented attached. The log-normalized results show that a fall of the cumulative real wage gap by 10% corresponds to a decline of the inflation gap by 0.9%. On the other hand, a 10% increase of the cumulative real wage gap after closes leads to an increased inflation gap by 2.2%. This confirms the theoretical prediction that there a break in the slope of the curve, as the coefficients are higher after the cumulative wage gap closes than before this happens.

The sector composition of the three Scandinavian stock exchanges provides an illustration. The Oslo Stock Exchange is heavily dominated by the energy sector, which is practically absent in Stockholm, Copenhagen and the two other Nordic exchanges. Norway has small traditional industries, but the IT and telecom sector is comparable to the other countries’ in relative size. The different sector composition of the stock exchanges also illustrates the potential for diversification by investing across the Nordic countries. The differences in industrial structure imply that international economic developments will affect the Nordic countries differently. Most notably, an oil price shock will have the opposite effect in Norway than in the other Nordic economies. In 2001, the petroleum sector in Norway accounted for around 20 per cent of total investments, 45 per cent of exports, 24 per cent of GDP and 35 per cent of central government revenues. The government net cash flow from the petroleum sector has increased in recent years. Since 1995, the fiscal surplus has been invested in the Government Petroleum Fund. The size of the Fund has increased rapidly in the last few years, and will reach close to 100 per cent of GDP towards the end of this decade, according to estimates from the Ministry of Finance. By investing a substantial part of petroleum revenues abroad, the Government Petroleum Fund limits the effect of the current account surplus on the exchange rate. GDP growth in Norway has been relatively high since 1990, also when excluding the petroleum sector.
Basel II builds on long-standing principles of bank safety and soundness, but with greater emphasis on modern tools of financial risk management and differentiation of drivers of risk. And, like the Sagrada Família, the framework for Basel II is firmly in place but much work still remains until the plans are finally executed. As I’m sure you’re aware, with the publication of documents on trading book/double-default and downturn LGDs last year, the Basel Committee has completed its work on Basel II policy development. Our efforts are now firmly focused on the challenging task of implementing the Framework as efficiently and effectively as possible. With that in mind, I would like to now touch on some issues relating to the calibration and implementation of Basel II, as well as work in both the Committee and the industry on complex financial products and risk management  BIS Review 46/2006  1  Calibration One of the Committee’s objectives throughout the development of Basel II has been to maintain the overall level of capital in the banking system. To meet this objective, the Committee introduced a socalled “scaling factor” of 1.06 into the Framework, with the agreement that this would be reviewed prior to final implementation. The Committee has just completed its fifth Quantitative Impact Study, or QIS 5, and I would like to express my gratitude to those of you here today whose banks submitted data as part of this exercise.

In fact, I would say that there is no other international regulatory initiative that gives more attention to these questions. For the sake of brevity, I will give you just three examples of how the new framework encourages banks to consider how risk determinants change over the cycle and in stressed conditions. First, banks are expected to use sufficiently long time series of historical data in designing their rating systems. The aim is to capture as much data as possible about how relevant factors have behaved in the past. Furthermore, when assigning ratings to borrowers, they should also consider how the borrower’s ability to meet contractual obligations may change in the future as a result of possible changes in economic conditions over the course of the cycle. Second, banks’ LGD estimates should reflect economic downturn conditions. The potential for realised losses to be higher than average during times of high default rates may be a material source of unexpected credit losses for some exposures. The Committee has elaborated principles that banks are expected to fulfil in this respect, and will continue to monitor industry practice and encourage the development of appropriate approaches to this issue. Third, Basel II places much emphasis on stress testing in the assessment of capital adequacy. Indeed, the new framework sets specific stress test requirements for banks using the advanced approaches to credit risk, but also encourages the use of these tests more generally.
BIS central bankers’ speeches  Charts and Tables Chart 1: Evolution of the global financial  Chart 2: Composition of IMF resources  safety net as a percentage of external liabilities (1980–2014) Per cent of global external Per cent of global external liabilities liabilities 14 3.5 Regional Financing Arrangments Swap Lines  12  3.0  IMF Temporary  10  2.5  IMF Permanent Self Insurance: FX Reserves (LHS)  8  2.0  6  1.5  4  1.0  2  0.5  0  1980 1984 1988 1992 1996 2000 2004 2008 2012  0.0  Sources: IMF, central bank websites, RFAs, Lane and MilessiFeretti (2012) and Bank calculations. GAB – General Arrangements to Borrow NAB – New Arrangements to Borrow Source: IMF and Bank calculations. Chart 3: Regional FX over- and underinsurance (2014)(a)  Sum overinsurance  Sub-saharan Africa  Middle East and North Africa  Latin America  Central and Eastern Europe  Sum underinsurance  Asia  $ billion 1000 900 800 700 600 500 400 300 200 100 0  Sources: IMF and Bank calculations. BIS central bankers’ speeches  9  (a) Degree of insurance is measured against the standard IMF metric. Chart 4: Access to regional financial arrangements bigger than 0.5% of regional GDP (2014)  Sources: National Sources, IMF and Bank calculations. 10  BIS central bankers’ speeches  References Brooke, M et al (2013) Sovereign default and state-contingent debt, Financial Stability Paper No. 27.

[17] The experience from these two crisis episodes shows that central bank liquidity provision can stimulate market functioning and lower money market rate dispersion. [18] During the pandemic, this was also clearly visible, as exemplified by the impact of our measures on term money market and commercial paper rates. [19]  After 2015, excess liquidity was primarily driven by the Eurosystem’s large-scale asset purchases. Although excess liquidity reached new highs with the implementation of asset purchases and financial stress remained at relatively low levels, the dispersion index rose substantially in 2015 and 2016. One factor that could cause such a rise is an uneven distribution of excess liquidity across countries or across banks and non-banks, similar to what had happened in US money markets in September 2019. [20] However, in recent years, the divergence across overnight money market rates was primarily driven by repo rates secured by high-quality collateral. Research suggests that this increase in the dispersion index can be linked to scarcity effects, as asset purchases and the increased regulatory demand for safe government bonds withdrew collateral assets from the financial system. [21] To alleviate these scarcity effects, the Eurosystem introduced the securities lending programme in April 2015. However, the programme was initially only sparsely used. Only when the ECB introduced the cashcollateral option in December 2016, securities lending increased and contributed to lowering the dispersion of money market rates, thus supporting monetary policy transmission (Slide 7).
This in turn assumes that authorities have enough information at any point in time to “connect the dots” of a complex network of CCPs and global dealers. Hence the critical importance of enforcing the new reporting requirements to trade repositories (TRs), and further to this, of being able to aggregate data collected by TRs across products, institutions, and jurisdictions, and conduct analytical work based on this data. 2 Optimal design of loss allocation tools [slide 9] Let me now turn to the third known unknown, which is the subject of much debate: what is the optimal design and composition of a CCP’s recovery tools? [slide 10] In the field of recovery, we are entering new territory, which is why the authorities have wisely taken a very cautious approach to giving guidance to FMIs on the design of their recovery plans. Ideally, recovery tools should be comprehensive, effective and controllable; they should create appropriate incentives for risk management and minimise any negative impacts. However, the challenge is that no individual tool can equally meet all of these criteria because of trade-offs, for example: •  Uncapped cash calls are comprehensive, but may create disincentives for central clearing. •  Variation margin haircutting can be comprehensive and effective (as it reduces payouts rather than requiring additional pay-ins), but the loss allocation and hence the systemic effect is uncertain. •  Initial margin haircutting may help achieve comprehensiveness, but increases the potential for contagion risk. The optimal choice of recovery tools is still evolving and remains a controversial issue.

In the U.S., we saw a spike in Treasury yields, with the 10-year rate rising by more than 100 basis points from early May before peaking in early September. Most commentary about this period has focused on the shift in expectations with respect to U.S. monetary policy – and, in particular, to uncertainty about the timing and implications of Fed tapering – as the catalyst for these moves. This focus seems generally right to me, although other factors also played a role. 1  1  Market participants also had to evaluate the possibility that growth in China and other EMEs might be slowing even as growth in the U.S. and other advanced economies was picking up. The subsequent market movements as investors withdrew funds from EME investments were an abrupt shock for these EMEs generally, especially after the long earlier period of abundant liquidity and ample inflows. BIS central bankers’ speeches  1  From one perspective, the unconventional nature of recent U.S. monetary policy adds little that is fundamentally new to the challenges that face the EMEs. These policies simply represent a way of easing, necessitated by our coming up against the zero lower bound. Central bankers have managed differences across countries in cyclical positions and policy stances many times in the past. This time should not be fundamentally different. But, from another perspective, we have less experience operating with unconventional monetary policy, and this creates more potential uncertainties.
Norman Chan: Welcome remarks - 2018 Green and Social Bond Principles Annual Conference Welcome remarks by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the 2018 Green and Social Bond Principles Annual Conference, Hong Kong, 14 June 2018. * * * Financial Secretary, Martin, distinguished guests, ladies and gentlemen, 1. Welcome to the 2018 Green and Social Bond Principles Annual Conference, co-organised by the Hong Kong Monetary Authority (HKMA) and the International Capital Market Association, supported by the Hong Kong Financial Services Development Council. 2. Today’s conference is the flagship event in the world of green finance, and rightly so. Since the publication of the Green Bond Principles (GBP) in 2014, it has become the de facto global standard for green bond issuance. These days, a majority of the green bonds issued globally follow the GBP framework, and many major markets base their local green bond standards on the GBP. In this Conference, we will have the opportunity to hear more about the latest enhancements to the GBP, and how green standards have been developing in different parts of the world. 3. Today’s conference is notable also because of its location. As Martin said, it is the first time that the conference is held in Asia. Looking at the turnout, it is a good choice. I am not just referring to over 900 registered attendees – this is clearly impressive.

I hope that this will be a successful conference and all of you will have a fruitful and productive discussion. 9. Thank you very much. 2/2  BIS central bankers' speeches
It is estimated that 1 out of 9 jobs in Norway are linked to the oil industry. BIS central bankers’ speeches  1  Fiscal rule It was established at an early stage that Norway’s oil and gas resources belong to the Norwegian people. The tax system for the petroleum industry was designed to make sure that the bulk of the large revenues, the economic rent from the petroleum sector, would accrue to the state. Petroleum companies pay a surtax of 51 percent of profits, on top of the normal corporate tax rate of 27 percent. The government also has direct ownership shares in the most profitable oil fields. However, policymakers’ handling of Norway’s newly discovered petroleum wealth got off to a rather bumpy start. During the first 25 years of oil production, Norway experienced two deep recessions. Both downturns were rooted in hugely optimistic income expectations. In the 1970s, the public sector was the big spender, and the government had to tighten policy later on. In the 1980s, a credit-fuelled consumption boom in the private sector led to necessary cut-backs after the oil price plunge in 1986. These two episodes of turbulence made clear how vulnerable a small open economy is to terms of trade disturbances, as well as to short-termism and exuberant expectations. To prevent the same mistakes from being made again, fiscal institutions were set up in the 1990s. Among the most important of these are the oil fund and the fiscal rule.

Stocks in different companies in a variety of sectors, loans to governments and corporations, and real estate investments in a number of global cities are all parts of the portfolio. At the end of 2014, the fund had investments in securities from almost 10 000 issuers in 75 countries. The fund is a global investor. Prices in financial markets carry information about the risk and return prospects of different assets, and the markets are fairly efficient most of the time. Hence, a natural starting point for the allocation across regions is the size of the different financial markets. However, the weights assigned by the fund to different geographical regions are the result of a trade-off between various considerations. The fund is a minority shareholder and dependent on good corporate governance and protection of our rights in legal systems. Regulatory conditions in investee countries must be relatively stable, and we must be reasonably sure that our investments are safe. From the start in 1998, a large share of the fund was allocated to Europe. At that time, the emphasis was on exchange rate risk related to the trade pattern of the Norwegian economy. As European countries are our most important trading partners, Europe was overweighted compared with market weights. Three years ago, the Ministry of Finance concluded that exchange risk had diminished, partly due to increased globalisation. Consequently the fund’s overweight in Europe was reduced. At the same time, the allocation to emerging markets was increased.
if the spot falls below the strike), the owner of the underlying security loses money but the owner of the option does not. That’s simply because he or she can always choose not to exercise the thing. Thus the fundamental value of a financial call option arises from the ability to pick one’s moment and avoid the downside risks that come with owning the underlying security. 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  Anyway, with these simple ingredients – and assuming, critically, that its prospective investment is irreversible – it turns out the firm’s decision rule is also simple. It will invest if and only if R ≥ ρ + qλL  [2]  This is just the version of [1] that applies in this particular case. 5 If there were no uncertainty (q=0) the investment would be justified so long as it offered any sort of excess return (R > ρ). But, given the uncertainty hanging over the decision, and in particular the risk that it might come to regret it, the firm needs an extra margin of safety – the “option value of waiting” qλL – before taking the plunge. What can we say about this term and what are the implications, if any, for Brexit uncertainty? The first thing to note is that, in common with all these models6, only the downside risk matters.

And the rising level of consumer debt means it would be reasonable to expect greater losses on it in our future stress tests. That might mean the system has a bit more difficulty passing future tests. If that were the case, a further strengthening of the defence line would be needed. We have already, in recent months, taken steps to strengthen banks’ defences against losses by raising the capital buffers they are required to hold on all their lending. 12  12  That was achieved by increasing the ‘Countercyclical capital buffer’ that banks must hold against their UK-related lending, from 0% to 0.5% of risk-weighted assets, and expect to raise it further, to 1%, in November. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  And to make sure this defence line is kept robust in the face of rapid consumer credit growth, we are accelerating this year’s test of banks’ consumer credit loans. By September we will have assessed whether the rapid growth has created any small gap in the line. If it has, we’ll plug it. The third of our three defence lines is direct restrictions on high loan to income mortgage lending. Lenders should not extend more than 15% of their new loans at or above 4.5 times the borrower’s income. And borrowers are subject to an affordability test that effectively varies that loan to income limit for their 13  individual circumstances.
While some future moderation can be expected in the light of tightening financing conditions and slower economic growth, bank borrowing by euro area non-financial corporations grew  2  BIS Review 57/2008  at an annual rate of 15.0% in the year to March 2008, and the flow of loans in recent months has been strong. For the time being, there is little evidence that the financial market turbulence seen since early August 2007 has strongly influenced the development of broad money and loans. Continued strong loan growth to non-financial corporations suggests that the availability of bank credit to euro area firms has not been significantly impaired by the financial turmoil thus far. Further data and analysis will be required in order to obtain a more complete picture of the impact of the financial market developments on banks’ balance sheets, financing conditions and money and credit growth. To sum up, a cross-check of the outcome of the economic analysis with that of the monetary analysis clearly confirms the assessment that upside risks to price stability prevail over the medium term, in a context of very vigorous money and credit growth and with no significant signs of supply constraints on bank loans. The economic fundamentals of the euro area are sound, and incoming macroeconomic data continue to point to moderate but ongoing real GDP growth. However, the level of uncertainty resulting from the turmoil in financial markets remains high.

All of these forces are in flux. For the majority of the period since the UK joined the EU, the first factor – greater openness and deeper integration afforded by EU membership – very likely increased the UK’s dynamism. To be clear, by dynamism I mean the ability of an economy to grow and progress. Dynamism is reflected in the rate of productivity growth, the degree of labour engagement, the pace of new business creation and the rate of new innovation. In the period since joining the EU, the 2  BIS central bankers’ speeches  UK has had among the fastest per capita growth rates in the G73 has consistently been one of the top destinations for foreign capital amongst advanced economies as well as the top destination for Foreign Direct Investment in the EU. Today, the UK economy stands as one of the most flexible not just in the EU but across the advanced world. Since the crisis began, the second factor – shocks arising from our biggest and closest trading partner – has challenged UK dynamism and made it more volatile. In the aftermath of the crisis, it is essential that the third factor – EU rules, directives and regulation – continues to support the UK’s ability to address risks to financial stability in the future. 2. Openness, dynamism and stability  The UK is an open economy par excellence. In fact, the UK has bet on openness for almost two centuries. A bet that has paid off handsomely.