samchain/econo-pairs-v1 huggingface dataset:
We need to see increased dynamism, particularly in those sectors which are not as directly affected by the current slowdown. Other measures are also necessary, such as liberalisation and deregulation policies, to improve competitiveness. Policies aimed at improving the human capital of our workers and increasing labour mobility should also be encouraged. Finally, a comment on fiscal policy. The current fiscal situation in Spain is sound, having ending 2007 with a budget surplus and reduced public debt. Indeed, let me recall that our public debt to GDP ratio, at 35%, is the lowest among the big EU countries. It is important to maintain this stance in the face of the current slowdown. Expansionary demand policies could prove counterproductive. We should avoid a deterioration of the budgetary situation beyond that implied by automatic stabilisers. Let me turn now to the financial sector. So far, the impact of the recent turbulence on financial stability in Spain has been limited. This is largely thanks to the actions of the banks themselves, who have not entered into the kinds of business that have been most directly affected. Spanish banks have demonstrated that you do not need to turn to the originate-todistribute model to become an efficient and profitable banking business. Plain vanilla, traditional business can be compatible with high returns on equity and efficiency. It also has the added value of implying greater stability. But I think that the Bank of Spain’s approach to supervision has also had a positive effect. Let me emphasise two key characteristics in this respect.

The result has been a sharp and synchronised contraction in economic activity across the globe and an unprecedented collapse in world trade. In the twelve months following the onset of the crisis, it seemed natural to expect those countries where the build-up in debt had been greatest, such as the United States and the United Kingdom, and those sectors that seemed most exposed, particularly financial services and construction, to be the hardest hit. But that is not how it turned out. The fall in UK GDP of nearly 3½% over the final quarter of last year and the first quarter of 2009 represents the largest half-yearly decline since records began in 1955. But that is comparatively mild seen alongside falls of almost 6% in Germany and nearly 8% in Japan, both countries running consistent current account surpluses. Moreover, as most of you will be only too aware, the downturn has hit manufacturing especially hard, with output in that sector down over 10% in the UK, 20% in Germany and 30% in Japan, reflecting the sharp decline in the demand for consumer durables and capital equipment that followed the loss in confidence and reduction in the availability of credit. Rigorous inventory control then propagated the fall in demand rapidly along globalised supply chains. Now producers cannot run down inventories indefinitely, so the rate of contraction should start to ease as de-stocking slows.
Against this background, we at the Bank of Thailand see the global recovery continuing firmly in the short term despite the higher oil prices. This year, Thailand’s export market - as measured by GDP growth of our major trading partners - is expected to grow by about 5 percent. This growth will be the key factor supporting our exports this year. At the same time, Thailand’s exports to China continues to expand, though at a lower rate compared to last year’s. Hence, the effect of the slowing Chinese economy on our exports is a factor that should be monitored closely. For the first half of this year, I am happy to report that Thailand’s exports to Australia grew by 16.6 percent while imports from Australia grew by 38 percent. Australia is now Thailand’s 11th and 12th largest trading partner on exports and imports, respectively, claiming a share of 2.3 percent of Thailand’s total trade. And with the recent conclusion of the bilateral free trade agreement between our two countries, trade between our two economies is likely to grow and grow. As for the global financial markets, let me just say briefly that this year global financial markets have been dominated by the changing expectations about the pace and the timing of monetary policy tightening in the US. And this has led to a global repricing of financial assets and some reversal of international capital fows, especially away from emerging markets.

The risk to global growth from higher oil prices is now an issue that captures the attention of financial markets. Compared to the previous episodes of high oil prices, this time the high oil prices could very well persist longer because the increase has been driven by the rise in global energy demand as well as by supply disruptions. But because the oil prices in real terms are still lower than the peak levels during the oil crisis of the 1980’s, while the global economy has also become less dependent on oil,  BIS Review 50/2004  1  common wisdom at this time is that the higher oil prices will put pressure on global growth and inflation but will not in itself derail the ongoing momentum of global recovery. As for the rise in interest rates, the risk to global growth coming from higher global interest rates so far looks less threatening. This is because interest rates especially in the US are being increased from very low levels and are being done gradually. In the case of the US, the increase is more of an indication that the Fed is regarding the current recovery as being solid. Moreover, because the increase in rates is good for maintaining economic stability as well as for addressing global imbalances, the increase in interest rates should be seen as a good thing and should be welcomed.
José De Gregorio: Monetary Policy Report Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the presentation of the Monetary Policy Report before the Finance Commission of the Honorable Senate of the Republic of Chile, Santiago, 13 May 2009. *  *  *  Introduction Ms President of the Finance Commission, Senator Evelyn Matthei, senators integrating this Commission and senators present, On behalf of the Board of the Central Bank of Chile I am grateful for your invitation to share our vision of recent macroeconomic developments, prospects and implications for monetary policy that are the substance of the Monetary Policy Report (the Report) of May 2009. When we began presenting our Report to this Commission in January this year, we said we were in the midst of the worst economic and financial world crisis in several decades. Today, four months on, we can say the situation has worsened. The world at large is in a severe recession. This year the level of global output will fall for the first time in over sixty years, and world trade will see an unprecedented decline. Since the Great Depression we hadn’t seen a world crisis of the magnitude we are going through today. Big challenges remain open, but in the past few weeks there has been “a glimmer of hope” that suggests that the developed economies may be stabilizing.

Clearly, many people would now question the validity of this mindset. But have we learnt our lessons? Unfortunately, I’m not so sure we have. While most people would agree with the view that excessive debt and leveraging was a major factor leading to the crises in the US and Europe, many would still think it is possible to overcome the problems without having to deleverage or somehow avoid the pain arising from the deleveraging process. 8. On the subject of pain, most of us understand what happens when we live beyond our means through borrowings at the individual, household or corporate level. Without any increase in productivity or income, excessive levels of debt can lead to insolvency or bankruptcy, which entails very serious and unpleasant consequences. However, the situation is a lot less clear when it comes to a country incurring excessive debt because the usual bankruptcy rules do not apply. Indeed, when compared to households or corporates, there are two significant problems relating to governments spending beyond their means. First, there is the temptation for governments to continue to incur deficits as the market seems to be quite willing, at least for a while, to finance such deficits. In this context, Greece is a good recent example. Secondly, there is the usual political pressure for governments to spend and borrow now, and worry about repayment later.
These range from the complex (the multi-indicator CAMEL model) to the relatively simple (only one of each of the CAMEL indicators) to the very simple (a constant – similar to the 1/N rule). The out-of-sample predictive performance of these restricted-sample models can then be considered. Charts 8 and 9 show the performance of the different models estimated across two sample sizes (100 and 1000 banks). Lower values imply better model performance. With a sample of 100 banks, the complex model performs poorly. It is out-performed by every one of the single-indicator models. Indeed, it is even out-performed by the constant. The sample mean beats the CAMEL-estimated model as a bank failure predictor for a small-enough sample. Expanding the sample to 1000 banks, the complex model now out-performs the simplest rule. But it still falls short of the performance of a model which comprises a single liquidity indicator. Chart 10 summarises the performance of three of the models (complex CAMEL, single liquidity indicator and 1/N) for samples of varying sizes. The complex model performs worst of all for smallish samples. And even with 1000 banks, the complex CAMEL model under-performs the single liquidity indicator. This evidence suggests that, even among simple banks in a simple environment, imperfections in information can mean that less is more. As when tracking serial killers or serial shoppers, one good reason may be enough. (6)  Modelling financial risks – simple or complex? The final set of experiments looks at modelling risk in financial markets.

(*) Significant at the 10% level  24  (**)  Significant at the 5% level  (***)  Significant at the 1% level  BIS central bankers’ speeches  Table 3: Risk-based capital versus leverage for major global banks Variable(a)  Model 1  Leverage ratio  –0.53 *** (0.19)  Risk-based capital ratio GDP Current account Credit-to-GDP  –0.82 *** (0.24) –0.04 (0.05) 0.001 (0.006)  Model 2  –0.09 (0.12) –0.89 *** (0.24) 0.04 (0.04) –0.002 (0.006)  (a) “GDP” is defined as average GDP growth over the period 2007–2011; “current account” is defined as the current account balance as a per cent of GDP in 2007; and “credit-to-GDP” is defined as the stock of bank lending to the domestic private sector as a per cent of GDP in 2007. Notes: For all models, the dependent variable is “failure”. Standard errors are shown in brackets.
In this sense, the euro has been successful, and the current crisis in the euro area has not yet changed this to any marked degree. The euro is the world’s second-largest international reserve currency, after the US dollar, and is recognised in trade everywhere. Underlying it is one of the two largest and most efficient financial markets in the world. As is discussed in Chapter 2, inflation has been close to the 2% inflation goal for most of the euro’s existence, averaging 2.1% from early 1999 until mid-2012 and currently measuring just under 2½%. On the whole, the euro  BIS central bankers’ speeches  3  has retained its value against other currencies. At the end of August 2012, it was nearly 6½% stronger against the US dollar than at the beginning of 1999, and 4% above the average over the intervening period. Euro area payment systems have proven effective, even in the financial crisis. No controls have been imposed on movement of euro-denominated assets, either within or outside the euro area. As a result, there is no currency crisis in the area, and it is therefore misleading to speak of “the crisis of the euro” as such. This does not change the fact that the euro area is currently faced with a complex web of problems that, if worse comes to worst, could threaten its very existence if political support for the currency union wanes.

But the fluctuations need not be larger than many other and larger countries appear able to tolerate. Finally, it is appropriate to emphasise that independent monetary policy under a flexible exchange rate regime can take many forms, including different types of price stability target and taking into consideration the role of money and credit in policy formation. It can therefore change from one period to another without necessitating major decisions concerning the currency as such. 1.7  Capital controls and exchange rate regime options  Lifting the capital controls is one of the most important yet most complex challenges facing Iceland at present. The controls have proven an important means of achieving stability in the wake of the financial crisis. Because of this, they were approved by signatories of the EEA Agreement even though they are contrary to the spirit of the Agreement. In the long run, however, it is critical that they be abolished. There are at least two main reasons for this. First, the costs associated with the capital controls grow over time and will ultimately exceed the benefits. Second, they are in contravention of Iceland’s international obligations. For the long term, it will be impossible to retain universal restrictions on capital outflows and remain in the EEA. Iceland must therefore make a genuine attempt to lift the controls. It may prove complicated and time-consuming, but there is no other option. This gives rise to the question of how capital account liberalisation is related to the choice of currency and exchange rate policy.
Inflation is low in Norway and has recently edged downed further. Underlying inflation is estimated to be in the interval 1–1½ percent. Low external price impulses and an appreciation of the krone in recent years have held the rise in prices for imported goods at a low level. The analyses in the March 2013 Monetary Policy Report indicate that costs in householdoriented industries have risen at slower pace than in the mainland economy as a whole in recent years. This is partly due to relatively high productivity growth. At the same time, high inward labour migration is providing a flexible supply of labour, which is curbing wage growth. Wage growth in Norway is also being influenced by low wage growth in neighbouring countries. Trade-offs in monetary policy Norges Bank’s conduct of monetary policy is oriented towards low and stable inflation. The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time. At the same time, monetary policy shall contribute to stabilising developments in output and employment. Since the introduction of the inflation target in 2001, annual consumer price inflation has averaged 1.8 percent, which is somewhat below, but close to, 2.5 percent. In Norges Bank’s assessment, consumer price developments since 2001 have been well within the flexibility provided for under the monetary policy mandate. The monetary policy response pattern can be summarised in three criteria for an appropriate interest rate path.

2  BIS central bankers’ speeches  If monetary policy only took into account the low level of inflation, the key policy rate would be rapidly reduced and kept close to zero for a good while. Inflation might then pick up faster, partly as a result of a weaker krone. In the light of the trade-off against other considerations, however, the Bank does not want to accelerate the pace of inflation. The result would be a pronounced impact on output and employment and increase the risk of a build-up of financial imbalances. When weight is also given to robustness and to stabilising developments in the real economy, the interest rate path will be higher. As a result of ample cross-border labour flows, changes in competitive conditions and new trade patterns, consumer price inflation has now been below 2.5 percent for a period. Prices for domestically produced goods have risen considerably more than consumer prices, reflecting the improvement in Norway’s terms of trade. Incomes, output and employment are growing at a solid pace and capacity utilisation is estimated to be above a normal level. Household debt and house prices have increased more than incomes. In today’s situation, it is appropriate to use a few years to bring up inflation. The interest rate has therefore not been reduced further. A higher key policy rate could have curbed debt growth and demand pressures in the Norwegian economy.
It has never been a question of inflation having to be 2 per cent just for the sake of it, but because this is a way of ensuring that 2  7 [15]  per cent remains the long-term anchor for price-setting and wage formation in the economy. In the same way that high inflation risks affecting economic agents’ long-term inflation expectations, too low inflation also risks doing so. Since nominal interest rates include compensation for inflation, these rates will on average be lower, the lower the average and expected rate of inflation is. Moreover, there is an effective lower bound for the policy rate, where the positive effects of further cuts cease and the negative ones begin to dominate. The combination of a low average interest rate and a lower bound for the policy rate means that the scope for cutting the interest rate will be limited.9 Monetary policy’s ability to stimulate the economy in serious economic downturns, when this is really needed, will thus be reduced. The fact that monetary policy has sufficient scope to do this is of course important, but it is perhaps not something that people notice in their everyday lives, in the same way that they notice if prices rise in the shops.

During the 20 century there was a development towards a greater element of competition and use of alternative operating forms within the public services sector. In the central government sector, state-owned monopolies such as the post office, the telecommunications administration and the state-owned energy company have been opened up to competition. Examples of remaining state-owned monopolies are Apoteksbolaget, Systembolaget, Swedish Railways, Svensk Bilprovning, Svenska Spel and Statens Pensionsverk. The county council/local authority sector has now chosen to expose to competition many of the businesses it runs. This includes waste transport, property maintenance, local bus routes, care of the elderly, cleaning, 6  SNS Economic council (2002), Unlimited competition, SNS-förlag. Exposure to competition is here defined on the basis of concentration and other barriers to competition such as companies' actions, regulations limiting competition, entry and exit barriers. 7  Price comparisons for housing are difficult. Differences in quality and structure between the Swedish and European housing markets makes accurate price comparisons difficult. For instance, there is a large supply of rental apartments in Sweden, while in other countries there are few of these and they are often greatly subsidised. Statistics Sweden estimates that the relative price for housing in Sweden is probably rather exaggerated. 4  BIS Review 25/2002  primary healthcare and dental treatment. Studies by the Swedish Association of Local Authorities show that increased competition in the county council/local authority sector operations have increased efficiency and led to lower costs.
There may still be loan losses that may damage trust and confidence in the market when they come to light. This applies to both the United States and Europe. Figure 1. House prices Annual percentage change  35  35  25  25  15  15  5  5  -5  -5  -15  -15 95  96  97  98  99  00  Danmark  4  01  02  Irland  03  04  Spanien  05  06  07  08  USA  BIS Review 60/2008  Figure 2. Property price index (FPI) and CPI in Sweden Index 1995=100  280 260 240 220 200 180 160 140 120 100  280 260 240 220 200 180 160 140 120 100 dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec- dec94 95 96 97 98 99 00 01 02 03 04 05 06 07 FPI  KPI  Figure 3. Household debt and interest ratios Per cent  200  20 Skuldkvot (höger skala) Räntekvot (vänster skala)  16  160  12  120  8  80  4  40  0  0 1982  BIS Review 60/2008  1986  1990  1994  1998  2002  2006  2010  5  Figure 4.

In addition, there is uncertainty over how monetary policy affects asset prices. The Riksbank conducts what is known as flexible inflation targeting. The objective is that the annual change in the consumer price index (CPI) shall be 2 per cent, but we also attach some importance to attaining a balance in production and employment. Asset price movements are normally included within the scope of flexible inflation targeting. We include changes in asset prices and other financial variables in the balance when we make our forecasts. However, the Riksbank has no target for property prices. 1  2  IMF World Economic Outlook, April 2003. BIS Review 60/2008  The Riksbank’s view is close to the reasoning that changes in asset prices should only be allowed to affect monetary policy to the extent that they affect our forecasts. But such a view is based on the forecasting models used being able to include the full effect of house prices on total demand in the economy. This is not the case for the Riksbank or other central banks; there are no forecasting tools that can entirely capture the effects of changes in property prices. The forecasts therefore have to be supplemented with qualitative assessments. How has the Riksbank’s stance affected monetary policy in practice? When the Riksbank raised the repo rate in January 2006 borrowing and house prices had a more pronounced effect on the decision.