samchain/econo-pairs-v1 huggingface dataset:
As has been discussed before by many of my MPC colleagues (see, for example, Bean (2011), Broadbent (2011), Fisher (2013)), to not have done so would have meant presiding over an even deeper recession and an even greater rise in unemployment. Rather than a constraint as some claimed, the inflation target and the credibility it afforded were essential in allowing the MPC to respond as forcefully as we did. The much vaunted flexibility offered by inflation targeting frameworks – to set policy in such a way that mitigates damaging booms and busts in activity as well as controlling inflation – can be exercised only if policymakers’ commitment to their target remains credible. Without credibility, there can be no flexibility. The experience of the UK economy over the past 5 years has provided a real-time examination as to how long inflation can remain above an explicit policy target without the credibility of that target being undermined. Thus far, the UK’s inflation target has passed this test with flying colours. And, in so doing, it has enabled the MPC to provide vital support to our economy. But although inflation targeting scored highly against its primary objective – anchoring people’s inflation expectations – there was, as my teachers used to say, some room for improvement. For me it was speling. For inflation targeting, at least as operated in the UK, it was in addressing some of the communications challenges posed by the sustained period of weak demand and elevated inflation.

With inflation well above target and the level of output still depressed, the Committee has to balance the speed  BIS central bankers’ speeches  3  with which it returns inflation to target and the support it provides to output and employment. If we attempt to return inflation to target too quickly, by withdrawing monetary stimulus, we risk undermining the fledgling recovery. But returning inflation to the target too slowly might cause people to question the MPC’s commitment to keep inflation close to 2% in the medium term. Again, the issue here is to do with the transparency and accountability of policy, rather than its actual setting. The need to juggle these two challenges – returning inflation to target and supporting growth – has been the single most important determinant of our monetary policy decisions over recent years. But an inflation target, on its own, is not well suited to explaining the judgements and rationale underlying the Committee’s approach. Put bluntly, it speaks to only one half of the trade-off. The stakes are high. Our management of the trade-off between returning inflation rapidly to target and supporting the recovery directly affects businesses and families up and down the country. It is only right that the Committee be clear about its view of the appropriate trade-off so that we can be challenged and held to account.
12  10  11  Source: Reuters EcoWin  BIS Review 56/2010  Unit labour costs compared to the euro area Percentage points 35  35  Portugal Ireland Italy Greece Spain Germany  30 25 20 15  30 25 20 15  10  10  5  5  0  0  -5  -5  -10  -10  -15  -15  -20  -20 00  02  04  06  08  10  Note. Broken line represents OECD’s forecast  Source: OECD  Current account deficits Percentage of GDP 6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  Portugal  -8  -10  Ireland  -10  -12  Italy  -12  Greece  -14  -14  Spain  -16  -16 90  92  94  96  98  Note.

This deterioration in competitiveness can be illustrated by the fact that unit labour costs have increased by between 10 to 20 per cent more than in the euro area as a whole since 2000, and even more in relation to unit labour costs in Germany. The deterioration in competitiveness entails less chance of a boost from exports and thus poorer opportunities for a rapid recovery as international demand increases. (Slide: Unit labour costs compared to the euro area). The strong growth in domestic demand in recent years and the weaker competitiveness have resulted in a current account deficit and thus rising foreign debts. (Slide: Current account deficits). In the case of countries with their own currencies one would expect a depreciation of the currency to restore competitiveness. This opportunity is not available to the countries in the euro area. Here, it is instead necessary for wages and prices to fall in relation to other countries. One difficulty in this context is that both public and private debts and the interest payable grow in real terms – that is, a larger part of production goes to meeting the costs of the debts. Developments in Germany show that such internal cost-cutting in relation to other countries is fully possible. The combination of a muted growth in nominal wages and productivity improvements has led to unit labour costs in Germany falling by 15 per cent since 2000, compared with the euro area as a whole.
But I will leave the Bank of England in the good hands of my successor, Mervyn King, when I step down in June, and I have every confidence that he will, by the time of your next dinner, have a positive story to tell.

Over the past few years the NBR has used all its available instruments to fulfil its tasks in the area of achieving price stability, seeking to ensure a low volatility of the exchange rate – an exchange rate which is set by the market. In short, all our steps have focused on maintaining stability and rebuilding confidence. In conclusion, over the past 10–15 years most economists have discovered good governance – with its four pillars: transparency, accountability, predictability and participation – as a major determinant of economic growth. Thus, economic governance implies the need to ensure stable, transparent and predictable rules that encourage competition and fair access to public services. It is achieved through a country’s public and private sector institutions and the civil society. Moreover, the recent crisis, which today wreaks havoc given the structural interdependencies worldwide, has underscored the need for an in-depth reform of economic governance at global levels. As Mr. Jean-Claude Trichet, the former ECB President, said, in light of the global crisis, “International interdependencies are too large for purely national or regional rules to be optimal and there is a clear need to strengthen global governance, in particular in the financial field.” I would also like to share with you a few thoughts about corporate governance. I’m sure the debates on this topic will be comprehensive during all these days and you, as specialists, will be able to unveil its very generous facets.
And these were compounded by the factors that had emerged during the crisis, such as the high unemployment rate and the burgeoning budget deficit. The main imbalances accumulated in the phase of strong growth were attributable to a sharp expansion in demand that gave rise to a substantial increase in private-sector debt, excesses in the real estate sector, and price and cost increases that tended to crowd out domestic output in favour of imports, systematically raising the external deficit. The unfolding of the economic crisis further complicated the situation. Firstly, because it gave rise to severe job destruction, as a result of shortcomings in the workings of the labour market. At 21%, the unemployment level has not only highlighted the need to reform the institutional framework of this market; the figure also raises doubts about the Spanish economy’s capacity to restore its potential growth and ensure the sustainability of its public finances. In this respect, the rapid fiscal deterioration has been one of the factors that has increased our country’s exposure to the euro area debt crisis. Our starting point was a healthy one, with a budget surplus in 2007 and a low public debt ratio. But the deterioration was so sharp that, in the space of scarcely two years, the deficit climbed above 11% of GDP and debt moved into a delicate dynamic just as the financial markets began to worry about the expansionary deviation of public finances in other countries.

The next step inevitably is the correction to the real economy, interest rates and/or the exchange rate, that can sharply worsen asset quality and expose the accumulated weaknesses in the financial system. Role of central banks in promoting stability and growth A central bank’s most important role in achieving stable, long-term growth involves promoting price stability. Achieving long-run price stability is a difficult and continuous challenge, as it requires constant efforts first to detect, and then to correct the building up of internal and external imbalances. Moreover, because of time lags in policy effectiveness, authorities often have to take action based only on partial evidence, well before adverse symptoms are fully evident. The principal reward for forward-looking policy is that changes in policy, and the associated stresses they engender, are generally smaller and more easily assimilated by markets. The effectiveness of monetary policy naturally brings us to the question of monetary and exchange rate regimes. A great deal has been said in various forums about the choice of monetary and exchange rate regimes. I believe it is crucial that there be consistency between a country’s choice of currency regime and its other policies. There is no "right" regime that applies to all cases and all points in time. Experience has shown that no currency arrangement can compensate indefinitely for imperfections elsewhere in an economy, such as weaknesses in financial supervision, an excessively loose fiscal stance, or inflexible wages and prices.
The size of ASEAN local currency bond markets is now five times larger than the total USD-denominated bonds issued by ASEAN entities, indicates the growing maturity, resilience and the important role of domestic bond markets in each economy. The compounded annual growth rate in ASEAN local currency bond issuance has been 12.9% since 2003. The regional individual markets have experienced growth rates ranging from 5.3% to 42.2%. These figures are very encouraging. The potential is enormous. A relatively new area of growth for ASEAN bond market is infrastructure financing. Infrastructure investments in Asia, by some estimates, will amount to a staggering USD8 trillion, over the next decade. ASEAN bond markets can play a big role in bridging this long term financing needs given that most economies within the region are bank-dependence for long term financing. Not only the  BIS central bankers’ speeches  1  economy would be better served by a new source of funds, but the risks of depending on the banking sector for long term financing would be greatly reduced. However, formidable challenges still exist. The financial linkages between ASEAN fixed income markets are insignificant and intra-regional investments by ASEAN investors are still small. Malaysia, the largest fixed income market in ASEAN, has seen a fair share of nonresidents participation and investment. Despite the growth of our fixed income market and the substantial non-residents investment, the participation from other ASEAN countries is limited. It would be a fair guesstimate that this is similar in other ASEAN fixed income markets.

Going forward, ASEAN with a sizeable population of 618 million offers vast investment prospects as the economy is expected to grow strongly for the next few years. ASEAN leaders have also embarked on an ambitious vision to create a single “common market”. Realisation of this vision will lead to a freer flow of goods and services, capital investment and skilled labour across the region. Many initiatives and measures have been implemented under the ASEAN Economic Community Blueprint since its launch in 2007 and many more areas of importance are being discussed and negotiated. Like most regional economic community, ASEAN aims to promote greater regional connectivity in which lessons of history in economic development had shown, would expand economic growth potential. Data has also shown that intra-regional trade flows have already grown substantially among ASEAN-10 members countries reflecting the increasing phenomenon of freer trade with its neighbouring countries in recent years. Consequently, the share of intra-regional trade has also increased, from 22.5% in 1999 to 25% in 2011. Against this backdrop, ASEAN financial markets had also grown significantly in tandem. In particular, the ASEAN fixed income markets, are instrumental to support the growth of intraregional trade, financing and investment in infrastructure. ASEAN fixed income markets have expanded by more than six folds since 2000, and now stand impressively at USD1.1 trillion.
Risks to the outlook for price developments continue to be seen as broadly balanced over the medium term, with upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices, and downside risks stemming from weaker economic activity and, more recently, the appreciation of the euro exchange rate. Inflation expectations for the euro area remain firmly in line with the Governing Council’s aim of maintaining annual inflation rates below, but close to, 2%. Our monetary analysis is consistent with price stability. The underlying pace of monetary expansion and loan dynamics remain subdued. The annual growth rate of loans to the private sector remains negative. To a large extent, subdued loan dynamics reflect the current stage of the business cycle, heightened credit risk and the continuing process of deleveraging. Overall, inflationary pressures should remain contained over the policy-relevant horizon. Taking the evidence together, this allows our monetary policy stance to remain accommodative. The impact of a low interest rate environment Let me turn to the first topic that you have chosen for our meeting today, namely the implications of a low interest rate environment. The impact of the global financial crisis on the economy and, potentially, on price developments has been unprecedented. We have taken unprecedented measures in response, aiming pre-emptively and forcefully to avert risks to price stability, in accordance with our primary mandate. First, we have reduced our key interest rate to 0.75%, a level previously unseen in virtually all euro area countries.

Thomas Jordan: Government debt and the independence of monetary policy Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the 21st Internationales Europa Forum Luzern, 8 November 2011. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Monetary policymakers are not responsible for fiscal policy, yet they still have to take an active interest in government finances. The current financial and debt crisis reminds us that unsound government budgets can compromise independent monetary policy in the long term. Excessive debt carries the risk that fiscal policy can no longer be effectively implemented. It is therefore no surprise that this responsibility gets passed to the central bank, which is thought to be able to solve all manner of problems by simply printing more money. Faced with this situation, the central bank must – either under political pressure or by having to weigh up all the relevant factors – contribute to state financing or take quasi-fiscal policy measures. This can lead to a gradual loss of its effective independence and – in an extreme case – to it losing its statutory independence. Only an independent central bank, however, can pursue its goal of ensuring price stability in a credible way. The debt situation in Switzerland is much better than that of other comparable countries.
However, some problems remain with regard to the institutional settings of the labour market, which may have to some extent inhibited the full realisation of employment gains from greater competition and innovation as illustrated by the still relatively high unemployment rate 7.7% in 2006 3 . All in all, the rise in employment did not cancel out structural weaknesses of labour markets and there is still considerable room to increase the level of labour resource utilisation in Europe. - Productivity is the other major factor determining growth. Over the last decade, the diverging trend in hourly labour productivity growth has been the main reason explaining the growth differential between the euro area and the US. During the 1980’s and the first half of the 1990s, hourly labour productivity in the euro area grew on average by 2.4%, then it decelerated to 1.3% between 1996 and 2006. By contrast, US hourly labour productivity growth rose from 1.3% to 2.1% over the same period. At the sectoral level, the gap in labour productivity growth between the euro area and the US has been mainly driven by some market service sectors intensively using Information and Communication Technologies (ICTs) namely the wholesale and retail trade sectors as well as the financial sectors. In contrast to the US, in these two sectors, labour productivity growth significantly decelerated in the euro area over the last 15 years.

Would you like to be able to inspect Member States’ budgets prior to their adoption by national parliaments as the Commission proposes to do? Each institution has its own responsibilities. The ECB is very closely involved in the work of the Commission and the Eurogroup. I support the Commission’s proposal, which I consider to be perfectly aligned with the goal of improving governance in the euro area. I have noticed some negative reactions, in particular in France, and I don’t understand this, especially in a country that has a tradition of favouring a strong “economic governance”. 2  BIS Review 76/2010  Can non-democratically elected bodies grant themselves a supranational inspection right? The governments of the Eurogroup all stem from a democratic process! They are the ones who, following any clarifications from the Commission – and where necessary from the ECB – take the decisions. Economic and Monetary Union includes a very close supervision and, when necessary, injunctions and sanctions imposed collectively by the governments participating in the Union. We are interdependent, which means that bad management on the part of a single member leads to problems for all of the others. Austerity plans are multiplying in Europe but certain economists are warning against an overzealousness that could jeopardise growth. What is your view on this? When a household systematically spends more than it earns, so that its debt rises exponentially, its situation is clearly untenable. Correcting this situation demonstrates both wise and sound judgment.
Aurelian exchanged good money for bad, and ordered the destruction of accounts drawn up in the devalued currency. In the long run the operation restored the value of money. But in the short run it caused hardship. Gibbon, in his Decline and Fall of the Roman Empire, observed that “a temporary grievance of such a nature can scarcely excite and support a serious civil war”. Unfortunately, taking a different and more Keynesian view that in the long run we are all dead, the population at the time rose in insurrection. Many of them found that they were dead in the short run as well, with seven thousand soldiers and countless civilians perishing during the suppression of the uprising. So let us consider the costs of wealth redistributions arising from unanticipated deflation. Such redistributions can lower aggregate demand. Why? Since it is difficult either to borrow or insure against uncertain future employment and earnings opportunities, current assets act as a buffer stock to make it possible to smooth consumption in the face of shocks to future prospects. When net worth is small it is risky to run down the buffer stock even further, and so the marginal propensity to spend out of wealth is much higher for households with low net worth than for families whose assets comfortably exceed their liabilities. If significant numbers of debtors have little net worth - recent firsttime house-buyers with high debt-to-value ratios are a prime example - then an unanticipated deflation could cause a sharp fall in aggregate consumption spending.

We would also like to reaffirm our unwavering commitment to the financial inclusion cause and look forward to deepening our cooperation with all stakeholders to fulfil the promise of greater financial inclusion, thereby bringing hope and better opportunities to our communities. Thank you. BIS central bankers’ speeches  3
And now some central banks may need to consider the implications for price stability if the process of globalisation were to slow or go into reverse. These issues are particularly relevant to the Bank of England as the UK inflation outlook will be importantly influenced for some time by a process of de-integration under Brexit. Today, I would like to draw on this example to illustrate how global factors influence domestic inflation dynamics and the ability of central banks to achieve price stability. II. Globalisation and Inflation While the global Phillips Curve appears alive and well (Chart 1), globalisation has been accompanied by a 1  weakening in the relationship between domestic slack and domestic inflation (Chart 2), and by a corresponding strengthening in the relationship between global forces and domestic prices. 1  As summarised by the slope coefficients in price and wage Phillips curves. The wage and price Phillips curves had already flattened during the 1970s and ‘80s, most likely linked – as Rogoff argued – to the institutional reforms made to monetary policy during that period. The finding of flattening Phillips curves has been widely documented. For example, Blanchard, O, Cerutti, E and Summers, L (2015), ‘Inflation and Activity – Two Explorations and their Monetary Policy Implications’, NBER Working Paper No. 21762, find that the median Phillips curve slope of 20 advanced and emerging economies fell by more than half between the mid-1970s and the mid-1990s, from around 1 to around 0.3.

Thus far, this disinflationary effect has mostly affected the 9  prices of goods (Chart 5), as trade in goods has been liberalised to a much greater extent than services. 10  Monetary policy makers in advanced economies have responded by accommodating relatively higher services price inflation in order to meet their inflation objectives. For example, in the UK core goods prices fell an average of 0.3% over the past two decades, services prices rose by an average of 3.4% and total CPI inflation was on average at target. 11  7  The slowing of trade growth since the financial crisis largely reflects the rotation of global growth to countries with less import intensive demand, notably the US and EMEs, as well as the declining import intensity of final domestic demand in China as the composition of growth there rotates towards consumption and services. 8 This positive supply shock comes about because the availability of cheap imports improves advanced economies’ terms of trade – the price of exports relative to that of imports. For more detail on this channel, see ‘Globalisation and Inflation’, speech given by Charles Bean at the LSE, 24 October 2006. 9 Abdih, Y, Balakrishnan, R and Shang, B (2016) ‘What is keeping US core inflation low?’, IMF Working Paper No. 16/124. 10 For example, barriers to services trade are estimated currently to be up to three times higher than those for goods trade. See ‘A fine balance’, speech by Mark Carney at the Mansion House, 20 June 2017.