samchain/econo-pairs-v1 huggingface dataset:
Two years into the crisis, the world economy has entered a new stage, in which fiscal policy is increasingly being discussed. The joint effects of monetary and fiscal policy have been central in averting a much deeper crisis. However, disentangling the effects of each one on the economy’s performance and determining the best course of action remains the topic of heated debate within academia and in policy circles, in particular, on the speed and timing of the fiscal retrenchment. This is largely dependent on the strength of each country’s fiscal accounts. The ten papers to be presented during the Conference will be organized into three sections. The first will assess the effects of fiscal policy on macroeconomic outcomes. The first contribution to this section, by Tommaso Monacelli, Roberto Perotti and Antonella Trigari, will focus on the effects of tax cuts on the labor market. Joachim Voth will present work that  BIS Review 143/2010  1  analyzes the extent to which fiscal retrenchment can take place before civil unrest is provoked. Rodrigo Caputo and Miguel Fuentes will examine the long-run effects of fiscal transfers and investment on the real exchange rate in a broad panel of countries. Mauricio Villafuerte, Pablo López-Murphy, and Rolando Ossowski will close with an examination of fiscal policies among resource-exporters in Latin America and the Caribbean. The second section will investigate the interactions of fiscal and monetary policy.

As the world economy began feeling the brunt of the global financial crisis with the fall of Lehman Brothers in September 2008, public discourse in most countries called for a rapid and decisive policy response. In an unprecedented move, finance ministers from many OECD and emerging countries announced important fiscal packages in an attempt to revive the world economy. Chile was no exception, where the government implemented a fiscal expansion over 2% of GDP – in relative terms, among the largest in the world. Central banks, for their part, also implemented large monetary expansion measures to stimulate the struggling economy, first by lowering interest rates to their effective lower bound, and then, in many cases, by taking additional steps aimed at providing liquidity to seized financial markets. This was also the case of Chile, where we reduced interest rates to its lowest historical level, and then increase its expansionary stance by implementing nonconventional measures. This is a fundamental factor in Chile’s current strong recovery. The present challenge is the withdrawal of the monetary stimulus at an appropriate pace, which insures that inflation forecast is consistent with our target of three percent in a two year horizon. We are taking into account the different factors affecting the outlook, such as the behavior of the exchange rate, the strength of the expansion of demand and activity, and the perspectives of lower interest rates in the world, among others.
Since the introduction of the euro, private customer prices of cross-border payment services have not decreased and in too many cases, the payee has been charged with some costs even though the payer has been requested to bear all costs. Furthermore, as the service provided in the case of cross-border payments is still poorer than that for domestic transfers in terms of the speed of the transaction, the higher price is not justified by better quality. In a report published by the Eurosystem in September 1999, it was emphasised that consumers should be able to transfer money as rapidly, reliably and cheaply from one part of the euro area to another as is now the case within each Member State. However, it was also acknowledged that this objective was far from being reached. Since the publication of this report, substantial progress has been made in preparing the ground for a more efficient handling of cross-border retail payments. The banking sector has agreed on so-called straight-through processing standards, which will allow the automated execution of cross-border payments. Furthermore, the Euro Banking Association has announced the development of a payment system specifically designed for low-value cross-border payments. In addition, the European Credit Sector Associations have taken two initiatives to further improve the prices and quality of cross-border customer payment services.

Ladies and gentlemen, The economic crisis, which occurred in 1997, caused the Bank of Thailand to review its role and task as the central bank of the country. This review pointed to a number of weaknesses in the Bank of Thailand's work in the past. As a result, the Bank has embarked on a comprehensive restructuring and modernisation programme aimed at improving the works of the Bank of Thailand to best serve the roles and responsibilities as a central bank. The strategy focused on 4 aspects, namely organisational structure and work process, human resource management, decision marking process, and database and information technology. The Bank of Thailand started the restructuring programme at the beginning of 1999 with the revamping of the management levels. Emphasis was placed on shorter lines of command, which facilitate fast and effective problem solving. The organisation is divided into five main business groups; namely, monetary stability, financial institution stability, corporate support services, financial institution rehabilitation and strategic capabilities. Objectives, roles, and responsibilities of each group are clearly stipulated. In 1999, the modernisation programme put the main emphasis on improving the work process.
A cet égard, j’aimerais souligner la performance de la France. La France compte parmi les trois pays qui ont satisfait rigoureusement aux valeurs de référence de tous les critères de Maastricht, notamment celui en matière de dette publique. Notre stabilité des prix et le bas niveau de nos taux d’intérêt à long terme nous ont placés parmi les trois pays, avec l’Allemagne, ayant présenté les meilleurs résultats : conformément au Traité, nos résultats, avec ceux de deux autres économies, ont par conséquent servi de référence à l’évaluation de ceux de l’ensemble des pays. La Banque de France a contribué — directement et indirectement — à ces résultats, en mettant en œuvre une politique monétaire indépendante et crédible. A ce propos, je souhaite mettre en avant un point très important. En édifiant une union monétaire, les pays européens n’ont pas seulement fusionné leurs agrégats économiques, commerciaux, financiers et  BIS Review 22/1999  2  monétaires, faisant de la zone euro un partenaire de premier rang en termes de population (290 millions d’habitants), de taille du PIB, de commerce international ou de masse monétaire : ils ont entrepris de créer une zone solide et stable. En fait, l’Union monétaire n’est pas une simple addition arithmétique de résultats économiques nationaux. Elle a été créée en prenant comme référence les performances réalisées par les pays ayant présenté les meilleurs résultats en termes de stabilité monétaire.

Philipp Hildebrand: Key factors for the Swiss economy – financial market regulation in Switzerland Speech by Mr Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank, Swiss Economic Forum, Interlaken, 4 June 2010. The complete speech can be found in German on the Swiss National Bank’s website. *  *  *  The financial system is the life blood of our economy. Key measures to increase the resilience of the financial system have already been implemented in Switzerland. However, they have not addressed the fundamental problem, which is that systemically important banks cannot at present be allowed to fail. The commission of experts set up by the government to examine ways of alleviating this problem published its interim report a few weeks ago. The report proposes measures in the areas of capital, liquidity and organisational structure. This approach is in line with the key points on the Financial Stability Board’s agenda. The interim report is an important milestone in the efforts to address the “too big to fail” issue. Naturally, we still face considerable challenges. Moreover, cross-border solutions are required for the “too big to fail” question. The commission’s proposals represent a constructive step towards global cooperation. If the key points on the Financial Stability Board’s agenda are not implemented in the major financial centres, we will ultimately be left empty handed. One of the few positive aspects of the financial crisis has been the unprecedented international collaboration to combat the crisis and the endeavours to cooperate internationally on regulatory reform.
The dramatic credit expansion of several of the Swedish banks in the Baltic region in euro is one example of a behaviour that entails considerable risks, something that the Riksbank has long pointed out in its Financial Stability Reports. 8  BIS Review 135/2009  There may therefore be good reasons for thinking about different ways to achieve a greater impact for our analyses and assessments in the future. Can we be clearer and more direct when formulating warnings and risk scenarios? Can we, for example, go public to a greater extent, for example by using open letters and so on, in order to increase the pressure on banks to change their risk behaviour? And how should we handle the increase in the banks' lending in foreign currencies? These are examples of questions that the Riksbank and other central banks must now address. There is no doubt that the crisis has raised important and complicated questions. Wars and crises usually strengthen the position of the state. This crisis is no exception. The central banks have taken over the issuing of banknotes, but the provision of credit is still essentially conducted on private markets. The general view is that it is not appropriate for the state to work, for example, with the credit assessment or risk assessment of individual loans. The state can establish rules and regulations for the market, but not work in the market itself.

Immediately after each meeting, the Bank issues a press release and holds a press conference. The key interest rate is set on the basis of an overall assessment of the inflation outlook two years ahead. Our inflation projections and our views on the balance of risks associated with these projections provide a summary of these assessments. Norges Bank’s inflation projection is our assessment of the most probable outcome of the rise in CPI two years ahead. In setting interest rates we also place emphasis on the probability distribution – or the balance of risks – surrounding the projection. Therefore, we also publish our judgement of the risk associated with our own projections. The phasing in of petroleum revenues has to be counteracted by a tighter monetary policy than would otherwise be the case. This may be accomplished through an adjustment of the interest rate, an appreciation of the krone or both. Small countries have experienced fairly wide exchange rate fluctuations. The Swedish krona has depreciated by more than 10 per cent since summer 2000. The Australian dollar has weakened by  BIS Review 18/2002  1  over 30 per cent since spring 1997. The UK, Canada and New Zealand have also experienced wide exchange rate fluctuations. The Norwegian krone, on the other hand, has been relatively stable. A monetary policy that is oriented towards low and stable inflation will contribute to stabilising aggregate demand and output. As a result, the central government budget will not normally have to be used actively to stabilise the economy.
High inflation and inflation that varies considerably over time result in random changes in the real value of assets and debt. This leads to unintended transfers between creditors and debtors. When inflation is high and variable over time, the function of prices as an information vehicle is also impaired. When inflation is low and stable, changes in relative prices are more easily discernible, and it is easier for households and businesses to make decisions about consumption and investment. Low and stable inflation is the best contribution monetary policy can make over time to employment, economic growth and welfare. The central banks in the first industrialised countries have attained a more independent status over the past 20 years. This is partly because Germany and its firm Bundesbank fared better during the period of high inflation in the 1970s and 1980s than many other countries. Arguments in favour of an independent central bank are also found in economic theory. Studies by Finn Kydland of Norway and Edward Prescott of the US at the end of the 1970s on economic policy rules were groundbreaking. 10 The insights gained from these studies provide arguments for ensuring central bank independence and deriving monetary policy objectives. History and theoretical studies have taught us that adverse effects may occur if the authorities do not take into account that households and enterprises are forward-looking when making decisions about consumption, investment, wages and prices. They base these decisions their expectations of economic policy in the future, not only on today’s policy.

The governor of Norges Bank is also required once a year – first in 2003 – to appear at an open hearing on monetary policy of the Standing Committee on Finance and Economic Affairs. What can we learn from history? We can learn from history. The experience of the 1970s and 1980s was a costly one. After the last devaluation in 1986, a fixed exchange rate policy was introduced and the economy went through a period of extensive restructuring. Confidence in the krone had to be restored to prevent persistently high inflation. This required very high interest rates. The Norwegian economy entered into the deepest recession since the interwar period. Unemployment rose from around 2 per cent in 1987 to 6 per cent in the winter of 1992/1993. Many companies went bankrupt and households faced debt problems. There was a crisis in the banking sector. Inflation only decreased to 2-3 per cent in the early 1990s. The years between 1986 and the beginning of the 1990s provide a realistic picture of the cost of bringing down inflation from a high level. 8  See Storvik (1998). 9  See Gjedrem ”Challenges in monetary policy”, Aftenposten, 4 May 1999. BIS Review 111/2008  5  Inflation has been low and stable since the mid-1990s because the objective of monetary policy has been to provide the economy with a nominal anchor. Economic agents should be able to rely on the value of money remaining stable over time.
When inflation in Norway is expected to be broadly in line with that of other countries, the exchange rate will usually also return to its normal range following periods when the krone has been particularly strong or particularly weak. The advantage of a flexible exchange rate is perhaps most evident when the economy is sluggish. If the krone were to remain at a level that is too strong, nominal wages would have to remain unchanged over a longer period or fall in order to bolster companies and jobs. This only occurs when unemployment is very high. With a flexible exchange rate, a depreciation of the krone can also boost competitiveness. A flexible exchange rate can reduce fluctuations in employment and output. 4  BIS Review 34/2004  Empirical studies2 have also suggested that economic growth in industrialised countries with floating exchange rates has been as strong as, and often stronger than, growth in countries with a stable exchange rate. A precondition is that there is an economic policy framework so that inflation does not spin out of control. The real exchange rate The chart shows developments in two measures of the real krone exchange rate, i.e. consumer prices and relative labour costs in Norway relative to trading partners, measured in a common currency. The real exchange rate measured by relative labour costs in a common currency is an expression of the cost competitiveness of Norwegian companies.

Some say this means our projections are worthless, or, even worse, will cause people to underweight interest rate risk in making economic decisions. I disagree. The accuracy of the early forecasts we write down is not so important as how the public can observe the forecasts change over time. As the economy is hit by shocks or the data come in contrary to expectations, we will change our forecasts for both the economic variables and the policy rate. As we do, households and businesses will be able to learn more about the monetary policy reaction function. And it is this knowledge that will help them make better informed decisions. Another criticism we heard on the day the projections were published was that they seemed to be inconsistent with the FOMC policy statement released a couple of hours earlier. The  4  Taylor (1979), Svensson (1997) and Woodford (2003). 5  Note a weight of 1 on the unemployment rate is equivalent to a weight of about ¼ on the output gap. Of course, policymakers could debate the relative weights to put on inflation and the real-side goal variable in their loss function. BIS central bankers’ speeches  3  statement indicated that the Committee thought economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014, but six of the 17 policy projections showed that the funds rate would be 1-1/2 percent or higher at the end of that year.
This evolution of trading appears already to have had an effect on financial market dynamics. On 6 May 2010, the price of more than 200 securities fell by over 50% between 2.00pm and 2.45pm. 32 At 2.47pm, Accenture shares traded for around 7 seconds at a price of 1 cent, a loss of market value close to 100%. No significant economic or political news was released during this period. The causes and consequences of this “flash crash” are no clearer now than at the time. But it is known that a number of large HFT trading positions coincided with these chaotic  32  10  Giffords (2010). BIS Review 114/2010  dynamics. In response, market-makers and liquidity-providers withdrew. Gresham’s Law re-emerged as bad money drove out good, its effects now taking milli-seconds rather than months. Trading in securities generated trading insecurities. The impatient world was found, under stress, to be an uncertain and fragile one. Patience and dividends Another way of gauging short-termism is to look at investors’ implied preferences for income today (dividends) over income tomorrow (retained earnings). 33 In theory, investors should be indifferent between these options, as the dividend payout ratio ought not to affect the value of a firm. 34 Empirical evidence suggests, however, strong evidence of high and sticky dividend payout ratios, almost irrespective of profits. 35 Moreover, dividends appear to be becoming stickier over time. Between 1825 and 1870, a study of over 500 NYSE listed firms found that dividend increases and decreases were roughly equally split.

But to calculate the annual inflation rate at that point, we have to compare with the April 2022 bill, which had already risen significantly. Because of this base effect, even if the bill itself goes up to a higher level, it goes up by less over a year than it did in October. The annual inflation rate therefore falls sharply from 96% to 52%. The contribution to consumer price inflation from the energy bill will nearly halve. Chart 2d: Typical household energy bill Smaller of Ofgem energy price cap and Energy Price Guarantee  Page 8  Looking further ahead, say to April 2024, the outlook is more uncertain. Wholesale energy prices have come down markedly over the past few months. If they develop as futures prices now suggest, it is likely that Ofgem’s energy price cap will fall below the Energy Price Guarantee. The numbers shown here are guesstimates, but they illustrate that we might expect household energy bills to start falling. This means that annual inflation in the typical bill will eventually turn negative as the bill drops below what it was a year earlier. Energy bills will start to drag directly on overall annual consumer price inflation. But as you can see, this does not mean that we should expect household energy bills to come down to previous levels any time soon. And from a cost-of living perspective, it is the level of what people have to pay that matters.
Unlike a unitary state, the euro area has 17 Heads of State, 17 Finance Ministers, and countless national parliamentarians. It can only be expected that their communication on difficult topics may sometimes diverge. As we have seen on many  BIS central bankers’ speeches  5  occasions, this triggers difficult feedback loops between politics and markets which ultimately undermine the impact of agreed policy measures. On one level this is a procedural problem: our institutions are not effective enough in ensuring political leaders speak with one voice. But on a deeper level, it is a problem deriving from the fundamentally different expectations of domestic populations and financial markets. Markets expect messages of confidence, of immediacy, of unlimited capacity to act. Domestic populations want to know the limits of their liability, to ensure that actions are just and fair, to make sure past mistakes are not repeated. A classic example of this divergence has been the debate over private sector involvement. For a domestic audience, banks should internalise the consequences of their lending decisions and should be punished for their past behaviour. But from a financial market perspective, such communication is disastrous. It signals to investors that assets that were previously risk-free are no longer so, that the euro area is a market where their investments are not guaranteed. And as markets are forward-looking, they sell their assets today. This immediately undermines the progress I have just described. A second example is the implementation of crisis response decisions.

We are actively promoting all these areas, capitalizing on our reputation and brand name. Singapore welcomed 380,000 Indian tourists in 2002, 11% more than the year before. We especially value Indian visitors, who stay longer and spend more than tourists from elsewhere. To attract more tourists from India, we have relaxed visa requirements, and made multiple entry visas more available. We are also wooing corporate customers from the region, to use our financial, legal and other professional services. Many Indian companies choose Singapore as the venue for their arbitration proceedings. We liberalised our financial sector thus freeing our capital markets and wealth management industry to grow. Indian companies that are expanding need capital, and will find Singapore a viable location to raise funds, be it debt or equity. The companies can tap into a large and growing investor base in Singapore. Close to 200 international fund management firms and 150 venture capitalists operate out of Singapore, managing over $ billion in assets. To support the growth of our economy, we are investing heavily in human capital, upgrading our skills and refreshing our knowledge. But in a small country of three million people, the talent pool is never big enough. We will therefore continue to attract talent globally. Over the years, we have benefited greatly from an inflow of talent from India, as well as of NRIs from around the world, and we will  BIS Review 3/2004  3  continue to welcome them.