samchain/econo-pairs-v1 huggingface dataset:
My assessment was that there was a greater risk that the international slowdown would be deeper and more prolonged than the majority of the Board believed. The signals regarding developments in the US economy were mixed and the assessment hung in the balance between a rapid recovery and a more long-drawn out sequence of events. In my opinion, there was every reason to wait for clearer indications before changing the interest rate. Others were more concerned that the weaker exchange rate would have an impact on inflation. The role of the krona for an inflation target policy As the krona has long come under focus, I would like to briefly remind you of the role the exchange rate plays in monetary policy. We have an inflation target, and the development of the krona has an effect on inflation, partly through import prices, partly through influencing demand for Swedish goods and services. For instance, if the krona has a low value, demand and resource utilisation in the export industry increase. When we want to influence inflation, we do so primarily via the repo rate. Occasionally, but in my view very rarely, we can also try to influence the exchange rate and thereby the inflation rate, through currency interventions. It is important to remember that we can never have a target for the value of the krona while monetary policy is directed at an inflation target. The monetary policy decisions are based on forward-looking assessments of the inflation rate.

This means that the Riksbank must make assessments of how the krona will develop in relation to other currencies during the forecast period, and assess what effect the development of the krona will have on demand for Swedish goods, as well as the impact the krona will have on consumer prices. None of these assessments is simple. Allow me first to point out the mechanisms that are important with regard to a direct impact on inflation via import prices. If the krona weakens and prices on the goods we import are determined in the exporter’s home country currency, the weaker krona will have a direct impact on import prices. For the weaker krona to have a full impact on prices of imported goods in the consumer channel, all domestic intermediaries must pass the price increases on to the end consumer. During the years with a floating exchange rate we have been able to note that the weakening of the krona has not had the impact on consumer prices that we had expected. One explanation could be that internationalisation and increased competition have first and foremost meant that the exporting companies endeavour to adapt their prices to developments on the markets where they sell, in order to retain their market share. It is reasonable to imagine that large corporations with sales and production spread around the world can act in this way without facing large fluctuations in profits.
My impression is that economic agents and analysts are generally fairly close to the mark in their analyses when they attempt to predict the interest rate level. Chart: Summary  BIS central bankers’ speeches  7  When the inflation target was introduced, Norges Bank stated that it would place particular emphasis on stabilising inflation in the initial years. As inflation became more firmly anchored, there was broader scope for giving more weight to stabilising output and employment. In addition, we now have ten years of experience and insight. Compared with the first years, inflation targeting is now more flexible. When Haavelmo received the Nobel Prize, he reminded us that economic policy can be demanding. A failure to react to the build-up of imbalances undermines confidence in economic policy. If we tighten policy to rein in imbalances – and succeed – we are viewed in retrospect as having been unduly pessimistic. There is, though, reason for a certain degree of optimism. Theoretically anchored models and improved methods for quantifying them empirically provide a better basis for conducting an effective economic policy. Moreover, we use professional judgement, which we take on board when we apply and further develop models and the analytical apparatus in Norges Bank. Knowledge about relationships in the Norwegian economy, in conjunction with professional judgement, provides a good platform. Thank you for your attention.

Growth in Continental Europe, which is highly reliant on impetus from exports, may weaken markedly if the dollar continues to fall. Chart 15. Mainland GDP and employment Annual growth. Per cent 6  6 GDP  4  4  2  2  0  0 Employment  -2  -2 1990  1992  1994  1996  1998  2000  2002  2004  Sources: Statistics Norway and Norges Bank  BIS Review 11/2004  11  Norway, like other countries, experienced a period of strong expansion in the 1990s. The expansion in Norway lasted considerably longer than in other countries. In 1998, the economy shifted from an upturn with high growth rates to an expansion with lower growth but low unemployment, labour shortages in many sectors and strong growth in labour costs. Wage developments culminated in the spring of 2002 and the expansion was reversed in the second half of the year. Growth came to a halt and employment fell. A number of factors triggered this development. Higher wage costs weakened the purchasing power of public entities. Global stagnation had a dampening impact on Norwegian exports. In Norway, the interest rate was kept high after the wage settlement and a persistent, unexpected low level of interest rates abroad resulted in a strong krone. The sharp rise in electricity prices last winter also affected the domestic economy. Chart 16.
Nevertheless, the Norwegian economy must now adapt to considerably lower demand from the oil sector. After many years of relatively high wage growth in Norway, the domestic cost level must again be brought more closely into line with that of our trading partners. A necessary adjustment of the cost level can occur in two ways: through lower wage growth than in other countries or through a depreciation of the krone exchange rate. 1  Estimate based on calculations in Blix Prestmo, Strøm and Midsem (2015): Ringvirkninger av petroleumsnæringen i norsk økonomi [Spillovers from the petroleum industry to the Norwegian economy]. Forthcoming report from Statistics Norway. Petroleum-related exports from mainland Norway are also included. 2  Including reserves approved for development by holders of oil rights and other proven resources in fields and discoveries. See The shelf in 2014, Norwegian Petroleum Directorate. 2  BIS central bankers’ speeches  Over time, monetary policy can only influence inflation. Monetary policy cannot assume a primary responsibility for delivering the necessary structural changes in the Norwegian economy. But via the exchange rate channel, monetary policy can help facilitate the necessary restructuring process. Chart: High wage growth (incl. the depreciation of the krone) Without our own national currency the situation would have been more challenging. The social partners would have had to go it alone. The experience of some European countries shows that this can be demanding. With a floating exchange rate, the necessary adjustment of the cost level can take place faster and be less painful.

The extraction of oil at great sea depths would require the development of new technologies. This entailed the building up of expertise in our own country, which would secure a full order book for many years ahead – and not only off our own shore. The activities on the Norwegian continental shelf would also provide a boost to other industries in Norway. Chart: A new market for the shipbuilding industry And the timing was perfect: economic stagnation and competition from Asian countries had brought the Norwegian shipping industry to the brink of a crisis. With the discovery of oil, an adaptable shipbuilding industry and the oil companies were soon on good terms. Building up a new industry and spending the revenues generated also brought a new set of challenges, and in 1974 these challenges were the subject of a government white paper, Report no. 25 to the Storting, entitled “The role of the petroleum industry in Norwegian society”. To provide room for the oil sector and higher consumption of goods and services, other industries had to give way. The mechanisms described in the white paper are familiar: “A transfer of production and jobs between firms and industries can occur via increased domestic cost pressures.” So, the nation was prepared for restructuring and for the costs this would involve. But the white paper also made it clear that, in order to reap the benefits of economic growth, restructuring would be necessary. We now know, more than 40 years later, that structural changes were indeed made.
He has cut fuel subsidies, and carried through the unpopular decision to raise fuel prices to keep Indonesia's budget deficit from ballooning. Acceptance of the need for continued economic reforms by the population will build investor confidence. Investors remain concerned about unclear and inconsistent regulations as well as the security situation because of the threat of terrorism. They are also unhappy with the restrictive labour laws in the country. If these areas can be improved, foreign investments will stream in. Indonesia is a huge and sprawling archipelagic country consisting of almost 18,000 islands, making it very difficult for a concerted take-off in one single planeload. So it may be a better strategy to think in terms of building a fleet of smaller jets. Each one will take off when ready. Eventually, the entire fleet will take the whole country airborne. In other words, it may be more practical to focus first on some parts of this huge country. These parts can then demonstrate to the other regions what is needed to attract investors and generate growth. They can also generate the resources to help other parts to grow. Indonesia has now decided to use the strategy of SEZs to spearhead its growth. Singapore is working with Indonesia to develop SEZs in the nearby islands of Batam, Bintan and Karimun. When the SEZs in these islands succeed, they will provide the thrust and momentum for SEZs in other parts of the country to do likewise. 4  BIS Review 86/2006  Conclusion Let me conclude.

Yugoslavia, Mexico and Egypt had the advantage of being close to the critical export markets in the developed world. Honduras and Tanzania had precious metal deposits, as did several of the other Latin American and African countries. Singapore had nothing, was over-populated and had high unemployment. Many economists of the day predicted that countries in Latin America and Africa would outgrow over-populated, resource-scarce Asia. The outcome, however, was totally different. Living standards have barely risen in Honduras in the last 40 years, and have declined in Tanzania. Tito's Yugoslavia no longer exists. East Pakistan fought a war with West Pakistan and separated to become Bangladesh. Civil war and internal disorder tore up countries like Liberia, Ethiopia and Uganda. Singapore which was written off by pundits as being not viable without the Malaysian hinterland not only survived but thrived. Its GDP per capita increased more than six-fold, better than any of the other 15 countries represented in my class. Why have the growth experiences of individual countries been so disparate? Some of you might have watched the movie, "The Good, the Bad, and the Ugly", released, coincidentally, exactly 40 years ago. Set during the American Civil War, it was about three bandits who each held one clue to a hidden trove of gold coins. They did not trust each other, and wanted all the money for themselves. In the end, the "Good" bandit who put all the three clues together won.
It is also precisely these questions that have been discussed in the general debate on the role of monetary policy in this context. I therefore intend to discuss these questions one by one and in relative detail. Can the repo rate affect housing prices and lending? It is probably true that the effect of a typical change in the policy rate on housing prices and lending to households is on average not very large. In addition, the policy rate is a blunt instrument when it comes to influencing housing prices and lending, as it is an interest rate that applies to the whole economy. This is why more specific tools, what are known as macroprudential tools, are generally perceived as more appropriate than the policy rate for counteracting this type of specific imbalances. But the effect of the policy rate most likely varies quite substantially depending on the circumstances prevailing at a specific time. In some situations it may be enough to make fairly limited increases to subdue an overly rapid upswing in the housing market, for instance, if the central bank combines these increases with communication emphasising that current developments are perceived as cause for concern.13 Small interest rate increases then function more as a concrete "reminder" that the central bank is concerned over  10  King (2012), p. 12. 11  IMF (2013), p. 3. 12  See, for example Svensson (2012).

At some point the "insurance premium" becomes too large, but I do not think this can be said to have happened yet. 17  For a comprehensive survey of the valuation of the Swedish housing market, see Sørensen (2013), in which the following conclusion is drawn (p. 71-72): “[A] cautious reading of the evidence gives reason to expect downward pressure on Swedish real house prices in the years to come. And if the Swedish economy were to be hit by a large negative shock, the downward adjustment of house prices could become more rapid than the analysis … would suggest.”  18  See Dagens Industri (2013b). 19  Bernanke (2010) describes the difficulties experienced by the Federal Reserve in determining whether or not the housing market in the United States was over-valued. 20  Similar ideas can be found in, for instance, Blanchard, Dell’Ariccia and Mauro (2013), p. 7: “[G]iven what we have learned about the costs of inaction, higher type I errors (assuming that it is a bubble and acting accordingly, when in fact the increase reflects fundamentals) in exchange for lower type II errors (assuming the increase reflects fundamentals, when in fact it is a bubble) may well be justified.”  8  BIS central bankers’ speeches  Are better instruments than the policy rate already available? The third question concerns the access to other tools than the repo rate for managing risk. Those who are critical of using the repo rate claim that there are already other and bettersuited instruments available.
François Villeroy de Galhau: Innovation and change Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Annual Exchange Conference “Innovation and change”, Paris, 19 January 2016. *  *  *  Ladies and gentlemen, It gives me great pleasure to respond to Stephane Boujnah’s invitation and take part in this annual conference, the subject of which is key to the French economy today. Our economy, which is at the frontier of technology, must be able to innovate continuously – and thus change – in order to improve its growth prospects. As a result, business investment, which is one of the keys to innovation, must be able to find new financing. This does not mean that traditional financing through bank loans is no longer necessary, far from it. It means that funding must become more diverse in order to meet companies’ financing needs, regardless of their size, age or sector. And of course, in this area, Euronext and the entire financial community have a vital role to play. But before addressing in more detail the financial levers of business investment, I would first like to talk about the economic levers that precede the need for financing. I. In economic terms, how are France and the euro area currently faring, and how can we move things up a gear?

But it is a vital part of that transformation, and I am pleased that this conference is giving it the consideration it deserves. Thank you for your attention. 1  4  P. Asdrubali, B. E. Sorensen and O. Yosha, “Channels of interstate risk sharing: United States 1963–1990”, Quarterly Journal of Economics, vol. 111, 1996, Oxford University Press. BIS central bankers’ speeches
As we would expect, the potency of these channels varies across households depending on their characteristics. For example, the strength of the cash flow effect depends on individuals’ stock of interest-bearing assets and liabilities. The labour income channel depends on the skills and age of the household. And the wealth channel depends on the size and composition of their wealth portfolio. Step Three: Final Distributions With these mappings, we can calculate the impact of the MPC’s monetary loosening on different household cohorts. Charts 10 and 11 plot this effect on household income, looking across the income distribution. This impact is shown on both a “money amount” and “percentage of income” basis. 26  These effects are also split  between the “cash flow” and “labour income” channels. The average household has gained in income terms by around £ each year, or close to £ cumulatively, from the MPC’s monetary loosening. Put differently, the average household would have been around 5% worse off each year had monetary policy not been loosened in response to the financial crisis. The lion’s share of this boost resulted from the positive impact of looser policy on jobs and wages. This is a slower-moving, harder to observe, channel by which monetary policy benefits households, but clearly a quantitatively important one. Looking at the distribution of these income gains across deciles, these are reasonably evenly spread as a percentage of income. The percentage gains are slightly lower among lower income households and are slightly negative for the lowest income decile.

Given the unequal starting position, however, the distribution of monetary gains for both income and net wealth is heavily skewed, with a quarter centred in London and the South-East. Charts 20 and 21 look separately at the effects of lower interest rates and QE, respectively, on the income distribution. Although part of the same strategy, these two instruments clearly operate through different channels and have different distributional effects. The effects of QE are predictably slanted towards financial wealth effects, while the effects of Bank Rate operate more through net interest income and house price channels. This analysis suggests that, with few exceptions, the impact of looser monetary policy on different cohorts of society has been positive and significant in income and wealth terms. Another way of making this point is to  28  Though a notable feature of the UK’s recovery has been that, notwithstanding the positive effects of monetary policy, the real income of younger people has fallen further and recovered more slowly than older age groups (Haldane (2016)). 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  ask what fraction of households are likely to have been made worse off from the loosening of UK monetary policy. Taking income and wealth effects together, only 4% of households were made £ or more worse 29  off. At the same time, this analysis has made clear that there are often large differences in the nature and scale of impact across cohorts.
To realise in full the benefits of the euro, we need to have the same components that made the euro a reality in 1999. On the one hand, we need national reforms to promote sustainable economic convergence. Under any monetary system, higher growth potential can only be achieved through continuous reform efforts. As the convergence process is primarily driven by structural factors, this is a key responsibility of Member States. On the other hand, Europe can make a difference by supporting and facilitating such reform efforts. Our togetherness represents a unique competitive advantage, and we should capitalise on this. First, we can build on the synergies between EMU and the Single Market. The Single Market is indeed one of the most powerful tools we have to unlock the mechanisms that will raise productivity. In particular, a genuine capital markets union (CMU) would not only ease and diversify access to funds for households and firms, thus fostering investment and innovation. It would also enable risk diversification and thus compensate for temporary drops in activity locally – the so called private risk-sharing –, thereby reinforcing the overall resilience of EMU. Second, it is essential to complete the projects that we initiated during the crisis, namely the banking union. Together with CMU, a complete banking union would deliver meaningful private risk sharing that is currently lacking in the euro area in comparison to the US. But private risk sharing, to be effective, needs to be supported by other policies.

A smooth functioning of the banking sector is therefore clearly an essential element in the resolution of Europe’s problems. As a central banker and supervisor, I see three major tools which can help to ensure appropriate financing of the economy and financial stability – both of which are essential financial conditions for sustainable growth. 1. Financial regulation and supervision must be tailored to the two objectives of strengthening the financial sector while ensuring an appropriate financing of the economy. Of course, after the 2008 financial crisis, the most urgent priority was to re-establish financial stability and bolster resilience to financial shocks. But in the implementation process of the new Basel 3 rules, we need to pay the utmost attention to their potential consequences for the financing of the economy, especially in view of the much shorter agenda. In particular, the new liquidity rules need to be adjusted. In addition, much more progress is now needed in the area of “shadow banking”. 2. Since the beginning of the crisis, the Eurosystem has constantly provided all possible support within the scope of its mandate to help the banking system overcome its difficulties. For instance, the idea of the two LTROs was to remove funding pressures in order to allow a smoother adaptation to the new rules and difficult environment. Simultaneously, this aimed to prevent a major credit crunch that would compromise both the financing of the economy and the maintenance of price stability in the area.