samchain/econo-pairs-v1 huggingface dataset:
Figure 3 shows that productivity in the paper and pulp industry is a result of internally generated technological progress as opposed to closures of weak units, which is predominant in other sectors. BIS Review 56/2003  7  Figure 3. Breakdown of total factor productivity, 1990-1998 100 90  Paper and pulp (SNI 21-22), average productivity grow th: 5.2 Telecom products (SNI 32), average productivity grow th: 9.2 M anufacturing, average productivity grow th: 4.2  80  Per cent  70 60 50 40 30 20 10 0 Percentage of productivity grow th that is due to internal im provem ents in productivity  Percentage of productivity grow th that is due to the closure of low -productivity operations and the start of high-productivity operations  Sources: Statistics Sweden and the Riksbank Note. The Figure does not show a complete breakdown of productivity and therefore does not sum up to 100. A full breakdown would also include covariance terms. See, for example, Foster, Haltiwanger and Krizan (1998), Bureau of Census, USA. Overall, the standard of living in Sweden has dropped in comparison with other countries because the country’s total factor productivity has lagged behind. We have fallen from a leading position in terms of standard of living to being a relatively poor industrialised nation with a below average income per capita among OECD countries. Our fall behind in total factor productivity is evident in industries such as engineering and chemicals while our basic industries have performed well.

The basic growth mechanism for our standard of living, i.e. labour productivity, now becomes the weighted sum of capital growth per capita and technological progress. Given a constant age structure of the population, and an evenly balanced age pyramid, the basic formula for growth in the standard of living can also be expressed as the weighted sum of capital growth per employee and technological progress (a complication that I will return to later is that the age structure is not constant). Capital formation contributed to lower productivity growth in Sweden Why did it go badly for Sweden during the 1970s and 1980s? First, it should be noted that the majority of industrialised nations suffered a drop in productivity growth from the beginning of the 1970s. This was due to the supply shock associated with the first oil crisis, when the price of oil tripled, followed by a second oil crisis at the end of the 1970s when the price once again increased threefold but this time from a higher level. As we know, the price of oil affects many parts of the economy. Oil is used as energy for transport and heating purposes and its price therefore has a direct impact on the costs of these. Moreover, firms’ costs are affected since oil products are often used as intermediate inputs in, for example, different plastic products. So all countries encountered problems due to the oil supply shock, but productivity growth declined more in Sweden than in other countries. Many explanations have been put forward for this.
As interest rates fall, intermediaries take on greater risk so as to meet this demand for returns. 13  Prominent examples include, inter alia: P. Krugman (2009), “How did economists get it so wrong?” New York Times (2 September); and W.H. Buiter (2009), “The unfortunate uselessness of most “state-of-the-art” academic monetary economics”, Financial Times (3 March). 14  See: C.E.V. Borio and H. Zhu (2008), “Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?” BIS working paper no. 268. 15  See: Y. Altumbas, L. Gambacorta and D. Marques (2010), “Does monetary policy affect bank risk-taking?” ECB working paper no. 1166; G. Jiménez, S.R.G. Ongena, J-L. Peydro and J. Saurina Salas (2010), “Credit supply: Identifying balance sheet channels with loan applications and granted loans”, CEPR discussion paper no. 7655; and A. Maddaloni and J-L. Peydró (2009), “Bank risk-taking, securitisation, supervision and low interest rates: Evidence from lending standards”, ECB working paper, forthcoming. 6  BIS Review 45/2010  Similar institutions will adopt a similar risk-taking strategy. Herding will emerge. Risk management behaviour will become more correlated across financial intermediaries. Risk will rise not only at the individual bank level, but also across the system as a whole. 16 Moreover, since the financial sector is now exposed to greater liquidity risk as a result of such behaviour, central banks are more likely to be called upon to intervene in the future. And the magnitude of such interventions will need to increase if they are to be effective.

3  See, inter alia: C. Borio and H. Zhu (2008), “Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?” BIS working paper no. 268; G. Jiménez, S.R.G. Ongena, J-L. Peydro and J. Saurina Salas (2010), “Credit supply: Identifying balance sheet channels with loan applications and granted loans”, CEPR discussion paper no. 7655; Y. Altumbas, L. Gambacorta and D. Marques (2010), “Does monetary policy affect bank risk-taking?” ECB working paper no. 1166; and A. Maddaloni and J-L. Peydró (2009), “Bank risk-taking, securitisation, supervision and low interest rates: Evidence from lending standards”, ECB working paper, forthcoming. BIS Review 45/2010  1  Upside threats to price stability were certainly emerging prior to the crisis, on the back of surging commodity prices and strong global growth. Let’s not forget, for example, that US headline inflation increased from 2.3% on average in 2003 to 3.2% in 2006 and 3.8% in 2008 (See figure 1). Core inflation increased from 1.5% in 2003 to 2.5% in 2006 and 2.3% in 2008 (See figure 2). Euro area annual inflation reached 3.3% on average in 2008. 4 To contain these upside risks to price stability, a case can be made that interest rates should have been higher than was the case before the crisis. Figure 1 Overall inflation  Figure 2 Overall inflation excluding food and energy  Source: ECB, BLS and OECD. Note: Average annual inflation rates. 4  2  On the basis of the harmonised index of consumer prices (HICP).
There is also the currency depreciation that could reduce the acquisition of imported capital goods imports. The behavior of inventories also poses a risk on the dynamics of investment. Already by the end of 2018 there had been an inventory buildup that at the time was believed would turn into investment, but that did not happen and, on the contrary, in the first quarter accumulated further. This, in a context in which, according to the IMCE, the percentage of respondents in wholesale trade who judge their inventories as unwanted has risen, and in which the interviewees for the Business Perceptions Report in companies that trade in machinery and equipment report sales below expectations, particularly in the northernmost regions. Consumption, meanwhile, has behaved as expected and the baseline scenario estimates that, after growing 3.1% in 2019, will grow an average of 3.5% in the next two years. Accordingly, the projection for this expenditure  Page 5 of 18  component remains virtually unchanged from the March Report estimates. The higher growth rates foreseen for 2020 and 2021 are consistent with the economy speeding up growth. The labor market has given more positive signals regarding employment, as can be seen from in the INE figures, the administrative records and the information obtained for the Business Perceptions Report. Imports of consumer goods have remained high (with the exception of automobiles) and the expectations of the trade sector remain optimistic, as indicated by the IMCE.

Taking into account the range of values and the uncertainty surrounding this calculation, we consider that the neutral MPR lies within the 3.75 to 4.25% range, that is, 25 basis points below the range we expected until March, partly reflecting the drop in interest rates around the globe (Figure 7). III. Baseline projection scenario  The convergence of inflation to the 3% target is subject to a baseline projection scenario that features the following characteristics. III.1. Activity and demand On one hand, as I mentioned, it considers that the activity gap will close throughout the projection horizon, a period in which the economy will accumulate growth above its potential. This is consistent with GDP growing in 2019 between 2.75% and 3.5%. This range is below the range we expected in March, mainly reflecting the effects of the negative surprise of activity in the first quarter. Actually, this projection assumes that the economy will resume higher rates of annual expansion in the second half of this year. For 2020 and 2021, higher growth rates are foreseen, between 3% and 4% in both years (Table 3). Page 4 of 18  On the expenditure side, compared with March, the biggest adjustments are seen in gross fixed capital formation (GFCF), a component that, instead of growing 6.2% this year as projected, will grow only 4.5%. This revision owes to a great extent to the poor first-quarter performance of the machinery and equipment component. This weakness has continued, according to partial second-quarter data.
Ms Hessius speaks on a number of topics including the “new economy”, the “long boom” and the actual and potential role of asset prices in monetary policy  Speech delivered by Ms Kerstin Hessius, Deputy Governor of the Sveriges Riksbank, at the Mjärdevi Science Park, Linköping on 29 October 1999. *  *  *  It is no exaggeration to say that the prospects for Sweden’s economy look much brighter today than when I spoke here in Linköping a year ago. At that time there was discussion of whether private consumption, which was then the main driving force behind demand, would be able to reverse the negative trend in the industrial sector. However, as it turned out, the financial turbulence in the global economy had limited real impact, and the turnaround in Asia came much earlier than expected. The lowering of interest rates by central banks probably contributed to the rapid recovery. The international economic outlook is therefore much brighter today. There is great optimism in Sweden about the future, both in households and business, and domestic demand is expected to remain strong in the years to come. Employment is also increasing at a satisfactory pace and public finances are being consolidated. Most observers, including the Riksbank, have substantially revised their forecasts for GDP growth for this year and for following years. As the economy has improved, expectations that inflation will rise have increased slightly, but they are still at a low level.

In the crisis in Southeast Asia, which is the most spectacular example of such a financial crisis in recent memory, the real value of foreign currency loans often rose when domestic currencies depreciated sharply. This kind of dramatic event only occurs when asset prices rise higher than the levels justified by underlying economic factors. This kind of situation in an asset market is what is known as a bubble. It might be worthwhile at this point to stop and reflect for a moment on the fundamental relationship between monetary policy and asset markets, on the one hand, and product and commodity markets on the other. The purpose of explicit inflation targeting policy that has been introduced in Sweden and many other countries in the last decade is to address recurrent overheating in product and labour markets. It might be said - even if it is strictly speaking not quite correct - that the aim is to avoid the “bubbles” that tend to appear in these markets from time to time. Generally speaking, inflation targets have hitherto proved their worth in this respect, and inflation targets appear today to constitute a credible basis - a nominal anchor - for price and wage formation. However, no corresponding anchor exists in asset markets. This means that there is nothing to prevent the prices of various assets rising to levels higher than those justified by economic fundamentals owing to psychological factors, or “irrational exuberance” if you like.
These improvements, along with sound fiscal policy, have increased trust in the Estonian economy and, furthermore, made it more resilient to economic shocks than before the crisis. Turning to some other indicators, the output level in our manufacturing sector already exceeded pre-crisis levels in 2011. Our exports are now at record levels. Compared to the third quarter of 2009, they have grown by 67%. Investments have also rebounded, becoming the fastest growing component of domestic demand. Over the last two years, our GDP has grown robustly and somewhat faster than we had expected, by around 8% in 2011 and about 3.2% last year. This is lower than the rates we would like to see in more normal times, and slower than the rate which Latvia achieved last year, but still a very respectable outcome given the state of the world economy. By now, we have recovered to about 95% of our somewhat unsustainable pre-crisis level. As a result, our unemployment rate has fallen steadily, most recently to 9.3%, which is lower than the euro area average. Our employment has risen to about the same level as it was in the middle of the boom period. Clear positive impacts are also evident in the financial sector. Joining the euro area removed any remaining risk of devaluation, working to lower interest premia, which are now near Nordic levels. Access to eurosystem liquidity support has decreased the risk of sharp interest rate fluctuations and sudden stops in capital inflows.

In order to join euro area, Latvia, like any other potential member, needs to be deemed to have fulfilled the “Maastricht criteria”, and to do so in a sustainable fashion. The recent euro area crisis has clearly revealed what can happen when the agreed rules are not followed, especially how damaging this can be for the country concerned. As a corollary, countries which sustainably adhere to these rules, and which have a clear track record of prudence and adjustment capacity, act as net providers of stability, bringing benefits to other members of the euro area. That additional benefit should be remembered. Also, the sheer signal of countries wanting to join the euro area right now is also another contributor to this confidence that we all need. This morning, I would like to briefly touch on three themes. First, a bit about the reasons for joining the euro area. Second, a bit about the process and making the point that it is more a process than an event. And finally, our experience to date as a member of the euro area. Starting with the motivating factors, in one sense we do not need a motivating factor because when we all joined the European Union in 2004, we made a commitment that the euro would be our currency. Thus, the “if” question has already technically been answered and it is only a question of timing.
The yield on Icelandic Treasury debt is now a bit lower than in the euro area countries that are facing severe sovereign debt crises, and real yields are considerably lower. It is not a given that this would be so without the capital controls. If the controls were lifted today, interest rates would probably rise sharply, even though a large proportion of the investors that own these bonds are relatively at ease within the capital controls regime. Without the controls, the authorities would have to take further action in order to achieve the objectives set for the coming year. It is therefore of pivotal importance to lengthen the maturity profile of Treasury financing before the controls are lifted. Marked progress has already been made in this area. The average duration of domestic Treasury bonds has increased from 3 to 7 years. Last spring, domestic pension funds and other investors purchased a sizeable supply of indexed longterm Treasury bonds by participating in the first auctions under the liberalisation strategy, which were dedicated solely to investment in long Treasury bonds. The aim was to lengthen the maturity profile of Treasury financing and thereby reduce risk. Although there has been a hiatus in the auctions and the pension funds lost interest in them after foreign stock markets fell this past summer, non-residents are growing interested in this investment option, which will continue to be available alongside the Investment Programme.

The difference between 3-month interbank rate and expected policy rate (basis-spread)  Sources: Reuters EcoWin and the Riksbank  2.World trade stabilising World trade monitor index, 2000 = 100, seasonally-adjusted data 180  180  160  160  140  140  120  120  100  100  80  80  60  60  40  40  20  20 0  0 90  92  94  96  98  00  02  04  06  08  10  Source: Netherlands Bureau for Economic Policy Analysis  8  BIS Review 111/2009  3.Growth in Asia GDP, annual percentage change 15  15  10  10  5  5  0  0  -5  -5 China South Korea  -10  -10  Taiwan Japan  -15  -15 00  01  02  03  04  05  06  07  08  09  Sources: National sources  4.House prices in the USA Index, January 2000 = 100, seasonally-adjusted data 250  250  200  200  150  150  100  100  50  50  0  0 88  90  92  94  96  98  00  02  04  06  08  10  Source: Standard & Poor's  BIS Review 111/2009  9  5.Growth increasing in the world GDP, quarterly change in per cent calculated as an annual rate, seasonally-adjusted data 10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4 Euro area  -6  -6  USA  -8  -8  TCW  -10  -10  00  01  02  03  04  05  06  07  08  09  10  11  12  Sources: National sources and the Riksbank  6.GDP Quarterly changes in per cent calculated in annualised terms, seasonallyadjusted data 10  10  5  5  0  0  -5  -5 July  -10  -10  September  -15  -15  -20  -20 00  01  02  03  04  05  06  Note.
Answering this question will require an extensive period over which to analyse job creation and destruction dynamics. In any event, some studies for other countries that have previously enacted similar reforms suggest that they have had a certain cost in terms of lower net job creation. Also, insofar as the labour market reform has been conducive to contractual stability in temporary employment agencies, the type of professional development of those workers who start their career at such agencies will need to be analysed. Another issue that will need to be determined is whether the reform prompts an increase or decrease in labour turnover and, therefore, its impact on the accumulation of human capital by workers and their working lives. Furthermore, labour market regulation can also affect the type of jobs available and, in sum, the type and productivity of the firms that are created. In particular, some of the literature suggests that greater constraints on temporary contracts increase business productivity, but at the cost of higher unemployment. All of these overwhelmingly relevant questions should be subject to rigorous analysis in the years ahead. Having a diagnosis on these issues is essential to recalibrating the characteristics of contracts, should it be necessary.17 The labour market reform has also brought about changes in collective bargaining.

For their part, inflation rates in April 2022 stood at 8.3% and 7.4%, respectively, that is, 6.9 pp and 6.5 pp higher than in early 2021. According to the earliest leading preliminary data available for the euro area, corresponding to May, inflation has risen once again, to 8.1%. Although the Spanish economy saw a gradual recovery over 2021, which extended to early 2022, this recovery is still incomplete and uneven by sector. In early 2021, the primary 1  conditioning factor was the epidemiological developments, as they required maintaining measures to contain the disease. The swift headway made in the vaccination campaign allowed a more buoyant phase to begin in Q2, but this was tempered from mid-2021 by the bottlenecks and higher energy prices, which were compounded towards the end of the year by the spread of the Omicron variant. In the opening weeks of 2022, with this wave of the pandemic subsiding and the first timid signs of relief in the bottlenecks, it appeared that the path to recovery was beginning to clear once and for all. However, the Russian invasion of Ukraine in late February has provided a further negative shock, which I shall refer to later in detail. GDP growth stood at 5.1% in 2021 as a whole, which slowed to 0.3% quarter-on-quarter in 2022 Q1. During this period there was an intense shift in the strength of activity, with the hospitality and leisure sectors becoming more dynamic as headway was made in vaccination.
I believe we should continue to play a support and resource role, in the further development of tools, such as the Code of Banking Practice and guidance on procedures, for the handling of complaints, and a monitoring role in ensuring that the system of self-regulation developed by HKAB and its members is working effectively. We can also help from an educational point of view by clarifying the options that members of the public have should they wish to complain about banks and by disseminating information on this through leaflets, our website, and other tools. A part of this clarification must set out the limits on what the HKMA can and will do in the taking on of banking consumer complaints: we are currently working on such a clarification. Self-regulation in the market, with support and guidance from the regulator, is, in my view, a sensible and appropriate way forward for a market economy such as Hong Kong. I am therefore very pleased that the general consensus seems to point in this direction. Whether this approach succeeds depends very much on the effort and energy put into it by the banking sector. It will also be influenced by trends in complaints over the coming months - rising, falling or otherwise - in the light of the many factors that  4  BIS Review 39/2002  give rise to complaints.

The thrust of the recommendations in the Consultancy Study is greater competitiveness through liberalisation, deregulation and simplification. But an equally important message is that greater competitiveness should not be achieved at the expense of the safety and soundness of the banking system. The challenge is how best to exploit future opportunities while containing the risks. Recognising that the global trends it has identified are likely to increase the level of risk to which banks are exposed, the Study makes a number of recommendations designed to enhance the safety and stability of the system as a whole. You are aware of the details of the recommendations. You may also wish to be aware of the fact that the internal deliberation within the Government, after the threemonth public consultation period earlier this year, is drawing to a close, and an announcement on the Government’s decision on the recommendations will likely be made shortly. I would like to take this opportunity to thank HKAB again for the very helpful views expressed on them. I would also like to take this opportunity to deal specifically with one of the recommendations that has been widely supported in the comments received during the consultation period, although the subject matter itself may involve a certain degree of controversy both in theory and practice. This is the recommendation that the HKMA should clarify its role as lender of last resort.