samchain/econo-pairs-v1 huggingface dataset:
Here is a rather pungent quote from a note he sent out on Jan. 2: “…QE [quantitative easing] puts beer goggles on investors by creating a line of sight where everything looks good…” For those of you unfamiliar with the term “beer goggles”, the Urban Dictionary defines it as “the effect that alcohol … has in rendering a person who one would ordinarily regard as unattractive as … alluring”. This audience might substitute “wine” or “martini” or “margarita” for “beer” to make it more age-appropriate, but the effect is the same: Things often look better when one is under the influence of free-flowing liquidity. This is one reason why William McChesney Martin, the longest-serving Fed chairman in our institution’s 100-year history, famously said that the Fed’s job is to take away the punchbowl just as the party gets going.2 … and the eye of the needle The other eye catcher for me was a cartoon in the Jan. 6 issue of The New Yorker. Sitting in a room are two businessmen who are apparently conversant with the New Testament’s book of Matthew. One says to the other, “We need either bigger needles or smaller camels”. Today, I want to muse aloud about whether QE has indeed put beer goggles on investors and whether we, the Fed, can pass the camel of massive quantitative easing through the eye of the needle of normalizing monetary policy without creating havoc. Free and abundant money changes perspective Boockvar is right.

Market operators are once again spending money freely outside of their day jobs. An example: For almost 40 years, I have spent a not insignificant portion of my savings collecting rare, first-edition books. Like any patient investor in any market, I have learned through several market cycles that you buy when nobody wants something and sell when everyone clamors for more. During the financial debacle of 2007–09, I was able to buy for a song volumes I have long coveted (including a mint-condition first printing from 1841 of Mackay’s Memoirs of Extraordinary Popular Delusions, which every one of you should read and re-read, certainly if you are contemplating seeing the movie The Wolf of Wall Street). Today, I could not afford them. First editions, like paintings, sculptures, fine wines, Bugattis and homes in Highland Park or River Oaks, have become the by-product of what I am sure Bill Martin would consider a party well underway. I want to make clear that I am not among those who think we are presently in a “bubble” mode for stocks or bonds or most other assets. But this much I know: Just as Martin knew by virtue of his background as a noneconomist who had hands-on Wall Street experience, markets for anything tradable overshoot and one must be prepared for adjustments that bring markets back to normal valuations. This need not threaten the real economy.
Relative prices, or price differences between goods and services, should ideally reflect demand and production cost. Correct prices contribute to the economically efficient production and distribution of goods. When it becomes difficult to observe relative prices, resource use may become less efficient. High inflation not only makes it more difficult to observe relative prices but may also impair the ability of relative prices to reflect supply and demand at a given time. The reason is that most prices are not changed continually. In a high-inflation environment, the relative price of a good gradually falls until the firm adjusts the price. Right before the price change, the relative price will therefore often be “too low”. Right after the price change, it will often be “too high”, because the firm will factor in expected inflation when adjusting the price. These inflation costs figure prominently in the New Keynesian literature but are probably not very large in practice. [2] A final point relates to distributional effects. High and variable inflation also leads to unexpected changes in purchasing power. Wage income and social security benefits are normally not protected against changes in the general price level – at least not in the short term. An unexpected increase  in inflation will therefore reduce most households’ purchasing power. This especially affects households that cannot draw on savings. In this group we are likely to find a large share of lowincome households.

[8] See Monetary Policy Report 3/22 [9] The model is a smaller version of our macroeconomic model NEMO. [10] The increase in the real interest rate follows from the Taylor principle, where the nominal interest rate should rise more over time than the rise in inflation. In most standard monetary policy models, the Taylor principle must be satisfied to keep inflation stable. [11] TANK is an acronym for “Two-Agent New Keynesian”. See, eg, Galí et al (2007). [12] This condition is entered as a residual term in our macroeconomic model NEMO to correct for variables that are not covered in the model. [13] Sims (2003). For an overview of the literature on rational inattention, see Maćkowiak et al (2021), “Rational Inattention: A Review”, ECB Working Paper 2570. [14] The response in the chart is comparable to the response in earlier model exercises even if we here look at a somewhat different, simple model. For example, this is a model for a closed economy, while the mini-NEMO model in the previous exercise is a model for a small open economy. [15] The model solves this by a Markovian switching mechanism where inflation expectations switch between two regimes: one with anchored inflation expectations and the other with backward-looking expectations. The probability of switching between the two is endogenous and depends on the level of inflation.
Lek deposit interest rates went down during the first half of 2006, and up after the tightening monetary policy signals. The interest rates were raised faster for long-term maturities, reflecting the adjustment of their term to long-term government debt rise. Lek credit interest rates went down for all maturities during 2006. The weighted average interest in December 2006 fell to 12.92 percent, from 13.50 percent it was in the previous year. Though the intermediation cost declined in comparison to the previous year, the spread level is still high. It is influenced by imperfect competition in this market and by higher risk nature of loans extended in ALL. The interest rates of deposits denominated in lek and euro continued to go up, as a result of monetary policy tightening by the Fed and the European Central Bank during 2006. Simultaneously, the interest rates of loans extended in these currencies went up. The interests of six-month to one-year loans in Euro and six-month loans in USD underwent the highest rise. At end of 2006, the weighted average interests of loans in USD amounted to 9.42 percent and interests of loans in Euro amounted to 8.17 percent, from 8.47 percent and 7.95 percent they were respectively at end of the previous year. 6. Exchange rate  During 2006, the Albanian lek has maintained its appreciating trend against the principal foreign currencies, though at a low intensity. In effective nominal annual terms, the lek has been appreciated on average by 1.1 percent during 2006.

At end of 2006, the Bank of Albania closely cooperated with the Ministry of Finance in compiling the draft-law “On Preventing Money Laundering and Terrorism Financing”. In accordance with the respective European Union directives and other international recommendations, the Bank of Albania, being the supervisory authority of the banking system, regards with priority the legal framework improvement for preventing the use of banking system for laundering money and wealth that derive from criminal activities. During this year, with the assistance of the World Bank, the drafting and completion of the regulatory framework for foreign reserve management was carried out successfully, reviewing the Bank of Albania’s policy on the management of such reserve, the management criteria and terms, as well as the decentralization of decision-making competences during this process. Internal audit In 2006, 44 audits and 3 verification procedures were carried out. The inspectors presented 269 findings and 197 recommendations out of these audits, which were carried out at the Bank of Albania and at its five district branches, the Printing House included. 11. Bank of Albania balance sheet  During 2006, the Bank of Albania assets further increased, totalling ALL 255.5 billion, about 14 percent higher than at end 2005. The constituent groups, both foreign currency and domestic assets, have reflected growth, while the first group occupies about 68 per cent of total assets, the same level as that of the previous year.
In countries where the banking sector has experienced large balance sheet shocks related to deteriorating sovereign debt, access to bank credit has tightened substantially. Elevated risk premia in the stressed countries have in turn had repercussions on access to finance, in particular for SMEs. In contrast, large corporations can resort to corporate debt instead of bank loans, especially during financial crises, or to foreign loans instead of domestic loans in the case of large multinationals, as happened, for instance, in Ireland.12 SMEs employ around three-quarters of the euro area’s workforce and they generate around 60% of its value added. Their restricted access to finance in a number of euro area countries is clearly a threat to economic recovery. A number of governments, including Portugal’s, are implementing measures to support the financing of SMEs. We see these measures together with the use of EU financial instruments (EIB and EU structural funds) as very important in unlocking access to funding and investment growth. The ECB has  9  See Blanchard O., D. Leigh (2012), Global Forecast Errors and Fiscal Multipliers, IMF Working Paper No 13/1. 10  See Roeger W., in ‘t Veld J.

Michael C Bonello: Population ageing - a major challenge for policymakers Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the opening session of two workshops on pension reform, organised in Floriana, Malta, by the World Bank Institute, 9 June 2003. *  *  *  I should first of all like to thank the World Bank Institute for choosing Malta as the venue for this Workshop and to welcome you all to our country. Your presence here continues a centuries-old tradition whereby Malta exploits its location at the centre of the Mediterranean and its reputation for hospitality to bring people and ideas together. Malta is currently undergoing a rapid transformation in a bid to seize the opportunities arising from accession to the European Union and from the further consolidation of its trading relationship with its Southern and Eastern neighbours. The economy, albeit small, has a number of vibrant sectors ranging from high-tech manufacturing to world-class conference tourism. As in the case with many other countries, however, the long-term prospects for economic development in Malta will be inevitably affected by the impact of population ageing. Given that the population support ratio, defined as the number of persons of working age to those of pension age, is expected to halve over the next 25 years to just over 2, this impact is likely to be significant. The global and regional dimensions of population ageing Malta is by no means an exception in this regard.
That membership rate has steadily declined over time, extending a broad trend apparent since at least the mid-1970s. In 2016, membership of trade unions stood at 23% (Chart 5). Today, around 6 million employees are members of trade unions, less than half the peak of around 13 million in the late-1970s. That fall in union membership rates has been broadly based. It has applied to both males and females, although the fall in membership has been greater among males with rates falling from 35% in 1995 to 21% today. It has occurred in both the public and private sectors, although public sector employees remain around four times more likely to be union members. And it has been true across all age groups, although rates of union membership tend to be lowest among younger cohorts, with rates among the 16-24 age cohort 8% compared with 30% for those aged 50 and over. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  The fact that unionisation rates have been falling within each age cohort over time, and are lowest among the young, suggests the downward trend in rates of unionisation may still have some distance to travel. For example, if unionisation rates were to continue to decline at the same average rate as over the past decade, then they are likely to fall to around 10% of employees, or 3 million people, within a generation. A more recent labour market trend is the increased importance of self-employment.

Caleb M Fundanga: Repatriation of bank notes between Zambia and Mozambique Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the signing ceremony of the Agreement on Repatriation of Bank Notes between the Bank of Mozambique and the Bank of Zambia, Lusaka, 4 February 2009. *  *  *  • Your Excellency, the High Commissioner; • Governor Ernesto Gouveia Gove, Governor of the Bank of Mozambique; • Members of the Mozambican delegation; • Bank of Zambia staff present; • Distinguished Invited Guests; • Ladies and gentlemen: May I begin by extending a warm welcome to Governor Gove and members of the Mozambique delegation to Zambia in general and to this signing ceremony of the Agreement on the Repatriation of Bank Notes between the Bank of Mozambique and the Bank of Zambia, in particular. Governor, the existence of an extensive border between Mozambique and Zambia has resulted in significant cross-border trade as evidenced by the movement of people, goods and currencies across the border thereby strengthening our shared identity and background as Africans. I must however, hasten to mention that, the cross border trade has hitherto been hindered by the need for traders from both sides of the border to convert funds into United States Dollars and then convert funds back into the other currency when purchasing goods or services. By so doing, cross-border traders incur foreign exchange losses as well as other conversion costs in the process.
BIS Review 23/2009  7  Lending to Swedish banks 500000  SEK, against commercial paper  500000  450000  USD  450000  SEK  400000  400000  350000  350000  300000  300000  250000  250000  200000  200000  150000  150000  100000  100000  50000  50000  0 okt-08 oct-08  0 nov-08  dec-08  jan-09  feb-09  Source: the Riksbank  Acting in different ways under different circumstances  Extraordinary events often require  extraordinary measures  Other ” tools”  Greater speed, flexibility and force  Decisions – what information do you have and what do you foresee ahead? A metaphor…  8  BIS Review 23/2009  Foto: Fredrik Edin, Cykloteket Racing Team  Reduced spread between mortgage rate and repo rate but risk premium for longer maturities still higher than normal Percentage points  M PR09:1  3.5  3.5 Difference between mortgage rates (5 year) and government bond (5 year) Difference between 3-month mortgage rates and the repo rate  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09  Note. M ortgage rates refer to average listed rates.

Stefan Ingves: Inflation targeting – the Swedish framework and experiences Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Reserve Bank of India, Mumbai, 15 November 2006. *  *  *  Let me begin by thanking you for the invitation. The theme of my speech today is the Riksbank’s monetary policy strategy and our experiences of inflation targeting. As you may know, the Riksbank belongs to the group of central banks that has a specific inflation target. This is a group that has increased in number in recent years. This of course reflects the fact that, on the whole, experiences of monetary policy with an explicit inflation target have been good. So good, in fact, that this policy has become an interesting alternative even for already well-functioning economies. When Sweden changed over from a fixed exchange rate to inflation targeting and a floating exchange rate in 1993, the situation was entirely different. We were in the midst of a deep economic crisis, where a total reform of the entire stabilisation policy framework was necessary. Monetary policy based on inflation targeting was at that time a relatively new phenomenon and there was considerable uncertainty as to whether it would work in Sweden. For those of us who were around during the crisis years, it is particularly pleasing to see how well the Swedish economy has developed over the past ten years, compared with the previous two decades.
If the self-employed were added to the mix, whose wage levels are on average lower, those jaws would be wider still (Gardiner (2014)). Taken together, this paints a picture of a widening distribution of fortunes across the labour market – a tale of two workers. The upper peak of the labour market is clearly thriving in both employment and wage terms. The mid-tier is languishing in both employment and real wage terms. And for the lower skilled, employment is up at the cost of lower real wages for the group as a whole. This has been a jobs-rich, but pay-poor, recovery. What is true among workers is also evident among companies (Barnett et al (2014a, 2014b)). There is evidence of a widening distribution of performance across companies and sectors. Since the crisis, the distribution of productivity across sectors has widened more than fourfold (Chart 20). And while productivity among the best-performing firms has held up, for others it has fallen like a stone (Chart 21). If this story of a growing, but diverging, economy is right, then the message is clear. Forecasts of both macro-economic sunshine and showers, tales of both agony and ecstasy, sightings of both the upper and lower peaks, may be here for some time to come. Monetary policy implications A bi-modal distribution for the economy poses a particular challenge for monetary policy. It can only affect average outcomes in the economy. Should policy tighten in anticipation of tomorrow’s sunshine for some? Or remain loose fearing tomorrow’s rain for others?

Luis M Linde: Performance of and outlook for the Spanish economy Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Senate in connection with the draft State budget for 2016, Madrid, 23 September 2015. *  *  *  Luis M Linde: Performance of and outlook for the Spanish economy Testimony by Mr Luis M Linde, Governor of the Bank of Spain, before the Senate in connection with the draft State budget for 2016, Madrid, 23 September 2015. Ladies and gentlemen, In my appearance today, as part of the process of discussion and approval of the budget in the Senate, I will focus on analysing the performance of, and outlook for, the Spanish economy and on the role of the State budget for 2016, following approval of the draft law by the government on 31 July, and the role of the Budget Plan for 2016, submitted to the Council of Ministers on 11 September. The external setting of the Spanish economy Heightened uncertainty is presently the most noteworthy feature of the external setting of the Spanish economy. The recovery in the advanced economies and the return to normal on the international financial markets have been affected by the consequences of the global economic slowdown, as a result of the downturn in some emerging economies, particularly China, and especially in light of the difficulties involved in assessing its real magnitude in the medium term.
An increase in global demand for euro-denominated debt securities is also expected as the euro becomes a major reserve currency. Moreover, the demand for higher-risk euro-denominated debt securities is likely to increase, particularly as the current low level of sovereign yields increases incentives to search for higher yields. Turning to equity markets, and first to the institutional set-up of stock exchanges, an evolution towards more integration and greater market efficiency is already apparent. As consolidation within the financial services sector has increased the size and geographical reach of intermediaries and fund management institutions, they seem to be pressing for market-places to become more concentrated in order both to reduce costs and to enhance liquidity. In addition, some companies have recently announced that they are reviewing their listing practices with the aim of reducing costs by cutting back on the number of exchanges in which they are listed. However, this development towards greater concentration does not necessarily mean that trading is concentrated only in a few exchanges. A possible pattern of development could also be for different stock exchanges to concentrate on specific types of companies (“blue-chips”, specialised industries, small companies and new companies, for example). In any case, the physical location of stock exchanges is becoming less relevant as screen-based trading with remote access is becoming more widely used. With regard to investor behaviour, an increasing number of equity market investors already appear to be taking positions on the equity market of the euro area from a sectoral rather than a national perspective.

However, there are good reasons to expect that corporate bond and commercial paper issuance in the euro area will gather pace in the future. During the first few months of this year we have already seen a fair amount of activity in this field. For large companies in particular, it makes sense from the point of view of efficiency to have all the methods of financing at their disposal, namely bond and paper financing, bank loans and equity financing. Indeed, since the credit ratings of many large companies are better than the credit ratings of most banks, this should lead to savings on the cost of capital for the corporate sector. The introduction of the euro should provide sufficient depth and liquidity for the corporate debt market that would guarantee competitive pricing. On the demand side, the reduced borrowing of the public sector will leave more room for the private sector to issue debt securities. As you know, the amount of public debt in the euro area is still high, and we trust that governments will keep their commitment to bring it down to more sustainable levels as agreed in the Stability and Growth Pact. In addition, the euro area has to save  BIS Review 63/1999  2  in order to be able to take care of its future pension payments, and a part of these savings is likely to be invested in corporate debt securities.