samchain/econo-pairs-v1 huggingface dataset:
One characteristic of the Chilean economy is that changes in costs are regularly passed on to consumer prices. Markets for foodstuff are globally integrated and competitive. In the case of fuels, every week the changes in the international price are passed on to domestic consumers. However, there is a price stabilization fund to smooth out short run fluctuations  BIS Review 39/2008  3  and recently there has been a gasoline tax cut, which ameliorates the large increase in international prices. Finally, the electric power price-setting mechanism is designed to pass changes in upstream marginal costs to retail prices. Electric power rates, affected by a rise in costs, posted an average increase of 23% during 2007 compared with a less than 6% average increase between 2000 and 2006. This context of price flexibility provides the right signals to markets. In the case of Chile, with the increase in the prices of electricity and minerals, several investment projects are in the pipeline, which will propel an expansion of supply. Electricity $ MM; index Dec-98=100) 1200  240  1000  200  800  160  600  120  400  80  200  40  0  0 96  98  00  02  04  06  III  07  Energy investment (2)  III  08 (1)  CPI Electricity  (1) Figures as of February. (2) Includes investment in buildings, engineering, equipments and others.

If agents expect inflation to go down towards a target, they will price their goods accordingly and inflation persistence will be lower. If, in contrast, agents expect inflation to persist in high levels, they will price goods higher, making inflation more persistent and more difficult for the central bank to bring it down. As stated in Bernanke (2007): “a one-off change in energy prices can translate into persistent inflation only if it leads to higher expected inflation and a consequent “wage-price spiral”. With inflation expectations well anchored, a one-time increase in energy prices should not lead to a permanent increase in inflation, but only to a change in relative prices.” Credibility of the target in an inflation-targeting regime is therefore a key asset. If we were to give up on the inflation commitment, the future adjustment of interest rates to rein in inflation would have to be much larger, with adverse consequences on economic activity and relative prices, in particular the exchange rate. Indeed, we have witnessed many experiences where a persistent rise in inflation has required strong monetary policy actions, the most notable case being the great inflation of the USA in the 1970s and early 80s. The control of inflation in Chile has also come with a decline in inflationary persistence. Therefore, a credible commitment to price stability brings along output stability. Output stability, in turn, is an important factor to foster economic growth and the consequent social progress that comes with it (Ramey and Ramey, 1995, and Fatas, 2002).
With disheartened creditors and investors, access to capital markets as well as short-term funding markets become increasingly impaired, impeding any possibility of a sustained recovery in the securities and credit markets. Ladies and Gentlemen, Global financial markets are now at a critical juncture. Risk aversion across the system has risen to unprecedented levels, and an aggressive deleveraging process is under way. Many  BIS Review 141/2008  1  financial institutions need to raise significantly more capital at a time when their ongoing earning power appears to have been permanently reduced. These dynamics will intensify the current global slowdown and have an impact although somewhat indirectly on emerging market economies, despite the relative strength of these countries’ financial institutions. In response to the renewed tensions, the authorities of a number of countries have introduced a number of measures and initiatives to address the problems at both market and individual institution levels. This should eventually encourage private investors to re-enter the market and complete the deleveraging process. Meanwhile, coordinated efforts have been strengthened to ensure adequate liquidity at an appropriate interest rate as inflationary pressure began to subside. Although it remains uncertain when the current financial storm will end, these international co-operations if properly executed will undoubtedly speed up the resolution of this crisis and ultimately limit its economic and financial consequences worldwide.

Going forward, the strategic location of Thailand and regional trend towards more economic integration provides an opportunity for Thailand in terms of market reach. We are located in the centre of ASEAN, with a combined population of more than 600 million, a large proportion who are of middle income and have potential to spend on goods and services. We are also to enter the ASEAN economic community, a regional agreement to liberalize and integrate trade in 2015 which would further develop trade prospects. Economic integration with CLMV countries will open up the opportunity to tap into a rapidly-growing consumer market as well as the regional workforce. Thailand is well known as a high performance production base in the region, especially for automobiles, food and petrochemicals. Meanwhile, the CLMV countries have a young and abundant labor force. Thus Thailand can benefit from a production supply chain that makes use of the CLMV resources for more efficient production to support businesses at home. Seeing these chances, the government has given priority to infrastructure by endorsing investment plans, especially in railways and roads, to reduce transportation costs, and setting up Special Economic Zones at five locations along our border to reap the benefit from our strategic location as a gateway to other ASEAN countries. On the side of the Bank of Thailand, we facilitate the ease of doing business through the Capital Account Liberalization Master Plan so that businesses can benefit from this opportunity.
In these cases, flexibility in the use of the labour input factor takes precedence over the desire to retain workers, as the human capital acquired in their job is relatively low. However, even once these differences in the productive structure have been taken into account, the proportion of temporary contracts is found to be greater in each sector taken individually. Turning to R&D, the experience of previous crises shows that, as with productive public investment, firms’ investments in innovation tend to be cut in times of uncertainty and financial difficulties, with the subsequent adverse impact on long-term growth.15 One of the factors behind this is that innovative firms encounter comparatively greater difficulties when accessing bank financing, as they tend to have a lower volume of tangible assets to secure their loans. As in the case of education, future public spending should pay special attention to this item because, far from worsening public debt, it contributes to improving it in the long term by raising potential growth, and the current crisis will also likely boost the ongoing digitalisation of the economy. 15  See P. López-García, J. M. Montero and E. Moral-Benito (2013), "Business Cycles and Investment in ProductivityEnhancing Activities: Evidence from Spanish Firms", Industry and Innovation, 20:7, pp. 611-636, and S. Baker, N. Bloom, S. Davis and S. Terry (2020), "COVID-induced economic uncertainty and its consequences", Voxeu. 39  Conclusion To conclude, we are facing a shock on an unprecedented scale.

In this same respect, in the case of households and non-financial corporations there are still some segments in a position of high financial fragility. For instance, in the case of companies, the smallest firms are more vulnerable to a scenario of declining revenues. But, moreover, in a crisis such as that at present where - as I have said - the pandemic is affecting different regions and sectors in differing ways, the downturn in institutions’ solvency will foreseeably depend on their degree of exposure to such firms. Third, the materialisation of losses in the credit portfolio as a result of the pandemic will directly affect bank profitability, as the preliminary results of significant situations for 2020 Q1 suggest. Profitability was already low before the outbreak of the crisis: as in most European economies, the profitability of Spanish financial institutions stood, on average, below the cost of capital last year. The crisis has meant that this spread has tended to widen. The COVID-19 crisis will adversely impact banks’ already modest profit-generating capacity. As in the case of solvency, it will affect different institutions differently depending on their business model and on the distribution of their exposures to the sectors and regions most affected by the pandemic. Moreover, the crisis has bolstered the prospect of the current scenario of low interest rates remaining in place.
And as inflation has been low, real wages have increased by 2.1 per cent a year. Let me summarise: the period with an inflation target and the Industrial Agreement have meant lower nominal wage increases, but at the same time higher real wage increases as inflation was much lower than before. Have the wage increases varied substantially between the three-year periods since 1997? Figure 4 shows how nominal and real wages have increased during the six three-year periods since 1997. 3 Nominal wages have increased at their lowest by an average of 2.8 per cent a year. This is the case during the two most recent three-year periods, that is, the time since the financial crisis in 2008-2009. The three-year period 2001-2003 is the one with the highest nominal wage increases; 4 per cent a year on average. Looking at real wages, on the other hand, recent years have seen the highest increases since 1998-2000, the first agreement period following the signing of the Industrial Agreement. If we summarise, there is no doubt that the years with a combination of inflation target and Industrial Agreement have led to much higher real wage increases than the previous years without an inflation target or the Industrial Agreement. Where are we now? That is what has happened so far, but where are we now? I think there are three important things so study when looking at the current situation and which have significance for the smooth functioning of price-setting and wage formation.

In addition, I am also glad that the partner in this Project is the latest EU Member State – Croatia, since for us, for the institutions of a candidate country, the experience that these experts have in the process of harmonization of the national European regulation in the field of a fight against counterfeiting is especially important. I believe that within the project activities these experiences will be conveyed to us at the most professional level. Therefore, on behalf of the National Bank, I express my deep gratitude to the colleagues from the Deutsche Bundesbank and the colleagues from the Croatian and Austrian central banks. With all of them, as well as with most central banks from EU member states, we have already established constructive cooperation in many areas, which is important for strengthening the capacities of the National Bank for joining the European System of Central Banks. Today’s event and this Twinning Light Project is the latest, but not the last. I hope that this event, where we all take part in the preparation of our country for accepting the euro as a national currency and accession of the National Bank in the Eurosystem, will complement this series.
The issue is with the barrels in which they are stored.20 Leaders and senior managers must be personally responsible for setting the cultural norms of their institutions. But in some parts of the financial sector the link between seniority and accountability had become blurred and, in some cases, severed. The public were rightly angered that so many of the leaders and senior managers who were responsible for sowing the seeds of the crisis and for allowing cultures to develop in which gross misconduct took place have walked away from their actions or inactions. In the UK, Parliament has established a stronger regulatory framework to allocate responsibilities to individual executives and board members and to give regulators the tools to hold them to account. The excuse of having delegated a responsibility simply will not wash. The public bail outs and the fact that few of the consequences of scandal have been borne by those who were directly responsible revealed a great deal about the balance of risk and rewards for those who worked in in financial services. Compensation schemes overvalued the present and heavily discounted the future, encouraging imprudent risk taking and short-termism. To align better incentives with the long-term interests of the firm – and, more broadly, society – major changes have been made. At the request of G20 Leaders, the FSB has developed principles and standards for sound compensation practices. 19  Chart 13 shows the sharp increase since 2010 in the number of FICC-related misconduct fines.

How can we expect emerging economies to participate fully in an open global system without the confidence that they won’t again be side-swiped by the failure of a large foreign bank? That confidence is growing as we make the system safer. Consistent, full and timely implementation of global standards is necessary to continue to build the cross-border trust on which an integrated system can be founded. Once the safety of the system is secured, the costs of openness will be contained. The road will be clear to secure the substantial benefits of openness in supporting trade and investment. Conclusion The Brisbane Summit marked the point at which the post-crisis system of prudential regulation was settled. That system, built on safer, simpler and fairer foundations than the one that led to disaster is able to serve households and businesses right across the globe. That we have reached this point is a triumph of the optimists over the world-weary arguments of the pessimists. The mutual trust and co-operation that has allowed authorities to get to this point is a vivid reminder of what can be achieved when countries work together. But as I said at the outset, just avoiding a repeat of past failures can’t be the height of our ambitions. Having built that level of co-operation it would be a travesty to stop at the foundations.
For some time now, the forecasts have been based on the assumption that the repo rate will develop according to market expectations as expressed in implied forward rates. The forecast results from the DSGE model comprise a central element, but are modified  BIS Review 62/2006  3  by assessments from sector experts, who in turn make use of partial models and various types of economic indicators. It is important to base forecasts on theories from modern economics with regard to how companies' and households' behaviour creates equilibrium in different markets. The DSGE models used are based on utility- and profit maximising households and companies basing forward looking decisions on rational expectations. This means that the model assumes that the economy is always at/or approaching equilibrium. Nominal rigidities mean that monetary policy has an effect on the real economy during a particular time. One important implication of the assumptions made is that financial imbalances caused by households or companies making decisions based on non-rational expectations which must sooner or later be corrected are not built up in the model. Examples of irrationality are if households believe that interest rates will remain at the low level they have held in recent years and if they then borrow more money than they would have otherwise done if they had more realistic expectations of interest rate developments. Models are thus unable to capture everything that happens in reality and it is also necessary for practical and pedagogical reasons to make simplifications.

However, in my opinion and that of others, the risk of such an approach is in overdoing it and thereby delaying a necessary adjustment of balance sheets and debt levels. New imbalances in other markets could then arise and the process will begin again. When the situation turns next time in other asset markets, there is a greater risk of reaching the zero-interest rate level. Many central banks have acted in this way, which may be the reason why a house price bubble has been created some time after a share price bubble. In my opinion, the economic costs in the shape of sharp fluctuations in demand are likely on average to be higher if the central bank does not take account of the effects on growth and inflation of inflated asset prices and credit expansion in its decisions. One reason for this is the high costs connected with the risk of achieving the zero-interest rate level if one waits until asset prices and indebtedness are corrected and demand is severely subdued before taking interest rate measures. Monetary policy after the stock market bubble The share price bubble at the end of the 1990s is an example of a financial imbalance that was built up despite low and stable inflation.
Tony Latter: Banking and development Address by Mr Tony Latter, Deputy Chief Executive of the Hong Kong Monetary Authority, at the 2001 APEC Economic Outlook Symposium held in Hong Kong, 28 June 2001. *  *  *  I should like this morning to address three particular aspects of the broad topic of banking and development. One is the contribution of banking – or the financial sector more generally – to the economy in terms of activity. The second is the role of banks as providers of cross-border finance for development. The third is the implications of the internet revolution for the development of banking itself. Contribution of banking to the economy Our very distant ancestors survived without money, let alone banks. With the passage of centuries and the growing complexity of barter, physical money emerged as a useful unit of account, a medium of exchange and a store of value. Still later, banks emerged as intermediators between, on the one hand, those with holdings of money surplus to immediate need and attracted by the prospect of earning interest, and, on the other, those willing to pay interest in order to be able to accelerate their spending. With the further passage of time various other means of intermediation, such as marketable securities, also developed. A key point here is that banks only emerged because of the evident utility in the service they provided.

This reasoning even led some governments to adopt policies with a bias to promote manufacturing in the belief that this would be the route to more rapid overall growth, although this seemed to ignore the demand side – that the public would become saturated with goods and increasingly desire to consume services. I don't know whether any of the protagonists of that school of thought are still alive today. If they are, and even if they could still identify some services where productivity has not advanced very much (hairdressers and taxis are among the usually quoted examples), they would be astonished at the productivity growth which has been apparent in banking and certain other service sectors around the world in recent years, as a result of the forces of globalised competition and the opportunities presented by technological advances. It is clear, therefore, that banking and other financial services not only provide essential support to development but also make their own contribution to national income. I am often asked questions such as what is the long-term growth prospect for this sector or how will the mix of activities within the sector evolve. The simple and honest answer is that I don't know. Plainly, there are limits to the likely domestic demand for these services. But that demand may be supplemented if overseas customers are attracted to use our local services, or, of course, diminished if local customers choose to satisfy some of their needs from overseas.
Muhammad Al-Jasser: Overview of the Islamic banking industry Speech by Dr Muhammad Al-Jasser, Governor of the Saudi Arabian Monetary Agency, at The Fifth Conference for Islamic Banks and Financial Institutions, hosted by the Central Bank of Syria, Damascus, 15–16 March 2010. *  *  *  In the Name of Allah, the Most Gracious, the Most Merciful Let me first thank the Central Bank of Syria, the official sponsor of the Fifth Conference for Islamic Banks and Financial Institutions, and, in particular, I would like to thank the Bank’s Governor, His Excellency Dr. Adeeb Mayalah. Ladies and Gentlemen, Islamic banking has grown widely in recent years and has extended to several international financial centers, which invested in this field, reflecting an increasing interest in financial Islamic products and services. Because of this interest, some of the international markets indices such as “Dow Jones” and “FTSE” have been launching indices for Shari’ah-compliant activities since 1999. According to the latest available data, the Islamic financial institutions’ assets exceeded $ billion by end of 2009, and they are expected to exceed $ trillion by end of 2010. In addition, issuance of Islamic Sukuk has risen fourfold over the last four years, exceeding $ billion by end of 2009. Islamic banks and financial institutions account for 15 percent of the Middle East top 30 banks’ assets. There are more than 430 Islamic banks and financial institutions in more than 75 countries and about 191 conventional banks have Islamic windows.

They are ultimately backed by their domestic fiscal authority and report to their domestic parliament (the euro area is no exception to this rule, even if sovereignty is shared locally). As a consequence, they cannot act as lenders of last resort other than in a discretionary way beyond the boundaries of their political constituencies. In addition, economic cycles do not always coincide across countries, which creates tensions between what is needed for domestic purposes and what is optimal from an international perspective (the demise of the Louvre Accord is a classic example). Finally, given that uncertainty is pervasive in economic policy-making, developing a common assessment of global risks and spillovers will always be difficult. This considerably complicates consensus-building concerning the design and enforcement of policies that countries should implement. Take, for example, the pre-crisis debate on the risks stemming from global imbalances. The current account deficit in the United States was seen by some as problematic, as they believed it would eventually trigger a balance of payments crisis or a sudden and strong depreciation of the US dollar with global ramifications. Others instead argued that the current  7  See in particular the seminal paper by Obstfeld, M., and Rogoff, K. (2002), “Global implications of self-oriented national monetary rules”, Quarterly Journal of Economics, Vol. 117, No 2, pp. 503–35. 8  This may partly also depend on the model set-up characterised by limited policy trade-offs.