samchain/econo-pairs-v1 huggingface dataset:
This is because average unemployment is independent of monetary policy and the inflation rate. This is in turn because inflation expectations are assumed to adapt to actual inflation. The long-term Phillips curve, which illustrates the relationship between average inflation and average unemployment, then becomes vertical, and average unemployment thus becomes independent of the average inflation rate. In Sweden, however, inflation expectations as measured according to TNS Sifo Prospera’s survey have stabilised around 2 per cent, despite the average inflation rate being lower. This is illustrated in Figure 2, which shows the five-year average of expectations one and two years ahead for all of those interviewed from 1996. The Riksbank has thus succeeded in anchoring inflation expectations around 2 per cent, despite actual inflation being lower on average. That inflation expectations are anchored to the target is good, and makes it possible for the Riksbank to better stabilise unemployment without inflation fluctuating too much. 14  PCE stands for personal consumption expenditure. 15  CPIX/CPIF refers to CPIX inflation up to the end of the first quarter of 2008 ad CPIF inflation from the start of the second quarter of 2008. The CPIX excludes the effects of indirect taxes, subsidies and mortgage costs from the CPI. The CPIF excludes the direct effects on the CPI of changes in mortgage rates. The average CPIX/CPIF inflation is 0.4 percentage points lower than the target when measured using real-time data for the period 1997–2011.

The diversity of experiences is also evident with respect to access to mortgage credit, both for households attempting to transition to homeownership and for homeowners who want to trade up. We have also been monitoring mortgage originations at the zip code level using the New York Fed’s Consumer Credit Panel. When we rank zip codes by their 2012 average adjusted gross income, we see mortgage origination volume in the lowest quintile locations was 38 percent of the volume for the highest quintile locations in 2007. By early 2015, this ratio had fallen to only 14 percent. As highlighted by these examples, and as you’ll hear during today’s presentation, data at the aggregate level and at a more micro-level illustrate different sides of the same picture. As such, both must be considered as we work toward fully understanding the economy. I will now ask Aysegul Sahin to provide a detailed account of how various economic outcomes vary across individuals, households and regions. 2  BIS central bankers’ speeches
Benoît Cœuré: Completing Europe’s Economic and Monetary Union Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Palestinian Public Finance Institute, Ramallah, 23 September 2012. *  *  *  I would like to thank Stefan Huemer for his contributions to the speech. I remain solely responsible for the opinions expressed herein. Mr Governor, Mr Consul General, Mr Vice President of the Board of the Palestinian Institute for Fiscal Policy, Deputy Ministers, Heads of Public Administration, Directors General, Ladies and Gentlemen, It is a great honour for me to speak at the Palestinian Public finance Institute. The establishment of the Institute marks an important step in the development of the economic governance framework in the Palestinian Territories. I wish this project every success. It relies on the commitment of so many dedicated people in the Ministry of Finance and in Adetef. As Jean Monnet, one of the founding fathers of the European Union, once put it: “Nothing is possible without men; nothing is lasting without institutions.” His words related to Europe but in fact they are relevant worldwide. The Middle East and Europe have always had close ties. They are both part of the Mediterranean region, which is economically and financially interlinked. And currently, both are experiencing an institutional transformation. In this part of the world it has come to be called the “Arab Spring”.

Indeed, the initial group of six countries that started this process has now expanded to become a group of 27 countries, with another one, Croatia, joining next year. Others are currently negotiating to become members. Proposals for deeper monetary integration date back to the Werner Report of 1970 and gained political momentum in the second half of the 1980s. At that time, Member States were taking steps towards establishing a single market. This included also the liberalisation of capital movements. As a consequence, Europe became captive to what Robert Mundell and other economists have called the “impossible trinity” – in other words, the impossibility of simultaneously achieving the three goals of financial liberalisation, exchange rate stability, and national monetary policy. One of the three goals had to be abandoned. The choice as to which one became increasingly clear after the failed attempt to secure exchange rate stability through the Exchange Rate Mechanism. 1 Given that a single market, including capital account liberalisation, had been a stated goal since the Treaty of Rome, and given that exchange rate stability was needed to reap the full benefits of the single market, Member States agreed to renounce monetary sovereignty. Moreover, sharing a currency makes sense for countries with close trade ties. This is especially true for the euro area countries which, since the start of EMU, have conducted almost half of their overall trade among themselves.
Should we conclude, therefore, that in the absence of a world government, the identification of “new rules of the game” is likely to be no more than a theoretical exercise? Certainly, the fate of Keynes’ proposal for an International Clearing Union is not encouraging. But the experience of the past twenty years shows that large imbalances mean that everyone suffers when there is a sharp adjustment. So there is scope, if not for formal international policy coordination, then for an international conversation about how to improve a system that is fragile. Central banks were able to ensure, for a while, that the paths of output were sustainable – consistent with low and stable inflation. But the patterns of demand were far from sustainable. And when the sharp adjustment to demand eventually came, it inevitably had implications for the level of output. Reform of the IMFS, and of our domestic financial systems, is a necessary complement to the domestic price stability oriented policy frameworks of central banks. The immediate issue of how to move to a more sustainable position requires a resolution of different countries’ economic strategies for rebalancing. There can be only one path for rebalancing – with rebalancing in the deficit economies, by definition, just a mirror of that in the surplus countries. But the path that would be chosen by high-saving economies differs from that which the more indebted industrialised economies would prefer.

Fixed, or managed, exchange rate regimes may help to limit the real economic costs of “excessive” volatility that reflects short-lived shifts in market sentiment, but if they impede desirable adjustments of real exchange rates, they contribute to unsustainable patterns of spending. There are other reasons why emerging economies, in particular, have managed their exchange rates. Perhaps the most important is that pushing down on the exchange rate is a means to pursue a strategy of export-led growth. Another motive, important in the wake of the Asian financial crisis, was to build up large precautionary balances of foreign exchange reserves as a way of insuring against sudden reversals in capital flows, especially of shortterm bank lending, that proved so damaging in the 1990s. 2  BIS central bankers’ speeches  Such policies distorted saving and exchange rates, and created large capital flows unrelated to the distribution of profitable real investment opportunities. Given imperfections in financial markets in both borrowing and lending countries, such capital flows can lead to a degree of fragility, such that, when adjustment comes, there is a high probability that it will be abrupt. For example, the distortion from a “too important to fail” implicit subsidy to the funding costs of banks in the industrialised world led to excessive leverage in these countries. Creditors were prepared to lend at lower rates and on a greater scale than they would have without the implicit subsidy. In other countries, financial repression artificially raised saving rates by making borrowing too costly.
In addition, it is useful for the ECB to draw on the experience of all central banks in Europe and their long-standing close contacts with the market participants. In short, the Eurosystem is organised in a way that ensures the efficient formulation and implementation of a single and coherent monetary policy for the euro area as a whole. At the same time, it draws, to the extent appropriate, on the existing resources and expertise of the national central banks. Structural reform needs in the euro area: improving market integration and competition Ladies and gentlemen, let me now address economic areas where structural reforms are needed to further enhance the functioning and the economic prospects of the euro area. I should like to start by referring to one of the most important structural differences between the euro area and the US. Regarding the degree of regulation, the US is currently more flexible than the euro area. For instance, higher rates of turnover in the US labour market are a signal that employers enjoy greater flexibility in tailoring their staff numbers to production needs. Flexibility of factors of production, including labour, facilitates the introduction of new technologies, allowing firms to organise their production processes more efficiently and to improve their competitiveness. Moreover, flexibility lowers the adjustment costs associated with economic shocks. The greater market flexibility in the US is connected with a relatively low degree of labour and goods market regulation as compared with the euro area.

Reasons to be optimistic regarding the long-term prospects of the euro area Let me now explain why I am rather optimistic regarding the future development of the euro area economy. The euro area is already highly integrated in economic terms owing to the creation of the single currency and Single Market and further progress in this respect is ongoing. This is a good starting point for dynamic economic development. My optimism is grounded in particular on the transformation we have witnessed over the past years, following the remarkable decision in favour of the Single Market. The successful establishment of the euro and the ECB, which together with the Single Market, have created a new economic entity, is evidence of the ability of Europe to implement far-reaching reforms which are well-designed and underpinned by solid institutional structures. This creation of an entirely new economic entity is a substantial step forward. The euro will act as a catalyst for further reform in many areas. My optimism is further underpinned by the fact that the Treaty sets out a durable anchor to guide economic decisions and to reduce economic uncertainty substantially by entrusting an independent institution, the ECB, with a clear mandate of maintaining price stability.
Similarly, the composite weighted average yield rate for Government bonds increased by 109 basis points to 11.5% during the third quarter, up from an average of 10.4% recorded in the previous quarter. Developments in commercial banks’ nominal interest rates were mixed during the quarter under review. The weighted average lending base rate (WALBR) continued its downward trend, falling to 19.8% from 20.9% in June 2010. Similarly, the average lending rate (ALR) fell marginally to 26.8% in September 2010 from 27.9% in June 2010. However, the 30-day deposit rate for amounts exceeding K20 million and the average savings rate (ASR) for amounts above K100,000 remained unchanged at 5.6% and 4.7%, respectively. Real sector Developments in the real sector were favourable during the reviewed quarter. This was reflected in increased output of metals (copper & cobalt), beer, soft drinks and cement. Further, international arrivals also increased during the period under review. The stock of maize grain held by major millers in the country rose by 124.6% to 101,807.0 metric tonnes (mt) as at 29th September 2010 from 45,336.7 mt as at 30th June 2010. In terms of holdings by province, Lusaka contributed 51,117.1 mt (50.2%), Copperbelt 26,644.0 mt (26.2%), Southern 19,861.0 mt (19.5%), Western province 4,050.0 mt (4.0%), and Northern 35.0 mt (0.03%) respectively, while Eastern province accounted for 100.0 mt (0.1%). During the reviewed quarter, copper output increased by 16.4% to 232,554.87 mt from 199,621.06 mt in the previous quarter.

Despite the weakened krona, the decrease in exports was extremely severe. It is natural to ask why. One explanation is that a large part of the decline in world trade affected investment goods and durable consumer goods such as cars. The purchase of these goods could easily be postponed when the crisis broke out. Such product groups represent an important part of Sweden’s exports. In could thus be said that Sweden was impacted particularly severely due to the composition of its exports. As I mentioned in my introduction, Sweden is a small, open economy that is highly dependent on exports. During 2009, GDP fell by over 5 per cent, the sharpest decline since the Second World War. Even if the krona was heavily weakened, this was not enough to prevent a major fall in exports. On the other hand, there are many indications that the weakening of the krona contributed strongly towards preventing inflation from becoming excessively low. Unlike abroad, where inflation became negative, inflation in Sweden remained around the target even during the most acute phase of the crisis (see Slide 6). Note that inflation in Sweden here disregards changes in mortgage interest expenditure – it is measured using the CPIF. This approach corresponds better with the way that inflation is measured abroad. 2 Developments in Sweden during the financial crisis differ in several regards from the crisis we experienced during the 1990s, when major problems were present in the Swedish economy before the crisis erupted.
It means that all EU countries — and thus non-euro countries such as Sweden — are bound by the rules for fiscal policy and its surveillance after the move to Stage Three. Each country is to strive for budgetary positions close to balance or in surplus in the medium term. This is intended to allow the automatic stabilisers free play while keeping the government deficit inside the 3 per cent limit. In this way the Pact provides for some flexibility in fiscal policy, which may be particularly important when there is no recourse to exchange rate adjustments. If the budget deficit exceeds the 3 per cent limit, sanctions can ultimately be imposed on the country in question if the problems are not tackled. It is only in exceptional circumstances that this may not apply. A surveillance procedure has been established for monitoring developments; national stability programmes are to be presented at regular intervals, showing how the goals are to be fulfilled. This process is perhaps as important in practice as the threat of sanctions. The establishment of clear rules and sanctions is intended to support the forces in each country that favour a disciplined fiscal policy. The sanctions do not apply to non-euro countries and they submit convergence programmes instead of stability programmes. So what has happened so far? The assessment of convergence or stability programmes from all the EU countries this spring shows a mixed picture.

Mr Heikensten speaks on the euro and European economic policy Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, the Swedish central bank, at Merita-Nordbanken in Malmö, Sweden on 16 June 1999. The single European currency, introduced at the beginning of this year, marks a major change for the economic policies of countries in the euro area. The clearest example is, of course, the transition to a single monetary policy. The proper functioning of the monetary union in the long term presupposes that the new European Central Bank succeeds in making its policy and the euro understood and credible. Important factors in this context are how the new central bank chooses to work, how monetary policy is continuously formed and how it is communicated to the general public and to markets. However, a well-constructed monetary policy and a central bank that acts wisely are not sufficient to ensure that the union functions in the longer run. If growth and employment in the euro area are to be as high as possible without jeopardising price stability, all the components of national economic policies will have to pull together. The fiscal, structural and labour market policies of the individual countries influence both the conditions under which the new central bank is operating and, to the highest degree, Europe’s future prosperity. A framework exists for this joint effort.
In order to provide some evidence on this question, we employ the vector auto-regressions estimated in Section 2 to assess how effective a relatively aggressive LATW policy would have been in moderating the credit/asset-price boom. Specifically, we inject a series of interest rate surprises calculated to leave policy rates roughly 200 basis points higher over the pre-crisis period 2003–2006, implying a substantially tighter policy than was actually followed. As most advocates of LATW seem to have in mind a relatively modest increase in policy rates, this seems to be at the upper bound of what might be considered appropriate. Conducting the counterfactual policy experiment by inputting a different sequence of monetary policy shocks without changing the policy rate reaction function is potentially subject to the Lucas Critique, but seems reasonable as it is likely that private agents would have taken time to alter their beliefs about that reaction function. Charts 7a and 7b show the implications of this policy, for the United States and United Kingdom respectively, together with one standard deviation confidence bands; 11 Table 3 presents some associated statistics for the median paths. The Federal Funds rate would have started rising in 2003, rather than mid-2004 and peaks at around 7.5 per cent in late 2006. The policy is quite effective at dampening real house price inflation, though the impact on real credit growth is more muted. Real house prices would have peaked around 7.5 per cent lower.

Among the latter, ADB was the first to issue RMB bond in Hong Kong in October 2010. A number of multilateral agencies also issued RMB bonds in Hong Kong after ADB’s debut issue. With the rapid growth of China’s cross-border trade and investment flows, the offshore RMB bond market would provide a useful financing platform and facilitate the greater use of RMB in these transactions, thereby minimising the currency risk associated with the use of a third currency. Notwithstanding the encouraging developments over the past years, the capacity of the regional bond markets is still limited compared with the huge infrastructure and other financing needs of the region, resulting in heavy reliance on bank financing. Much work still needs to be done, including but not limited to expanding the issuer and investor types, gradual liberalisation of barriers to entry of non-resident investors, promoting financial infrastructure linkages, improving corporate disclosure and transparency, more standardisation in legal and governance terms, to name a few. Policymakers will have a key role to play in facilitating market developments and removing market impediments in the process. And we hope to see ADB, the region’s long-standing partner in promoting bond market development, to further its efforts and cooperation with governments in the region on this front. Thank you. 2  BIS central bankers’ speeches
I refer of course to the review of Solvency II, led by the Treasury with close involvement from us. This is a great example of an area where we can tailor a regime designed for 28 countries to work much better for the one we inhabit, cutting bureaucracy and supporting competitiveness while maintaining high standards. I am grateful to actuarial teams and other colleagues in firms who have been hard at work preparing quantitative and qualitative submissions which should allow us to understand the potential impact of any changes. It is important that this work moves forward at a good pace, but it is also important that we get it right – no one will thank us if we accidentally drill a hole in a perfectly sound tooth, or put a cap on the wrong one. Some of those in the debate whose job it is to promote the interests of shareholders favour a straightforward weakening of the regime. We, with a statutory objective to protect policyholders, are cautious on weakening. This difference of perspectives is of course entirely unsurprising and a natural part of the reform process. For our part though we have reached no firm views on any proposals at this point, because even before consulting we will need to be informed by the data which will shortly come back in from firms.

One of the difficulties faced in trying to encourage this business is that the major providers, such as the so-called “monoline” insurance corporations in the United States, may not find it profitable to work on what for them may be relatively small, plain vanilla deals, when compared to the fees available from larger and more complex deals in North America. Another problem is that such companies tend not to look to enhance securities with original ratings below triple B. This in turn raises questions about fundamental credit quality in the region as well as about the potentially wider role for rating agencies. Another area where we might expect to see further innovation is the securitisation of pools of assets such as mortgages or receivables. We have recently witnessed the resurgence of the mortgage-backed security market in Hong Kong, spearheaded by the Hong Kong Mortgage Corporation. This market has the potential to develop even further if the property market recovers buoyancy. But there is also probably scope for more activity in the securitisation of such things as credit card receivables, leasing receivables and the like. These could form attractive debt securities, although, as we have seen with so many issues of securities, the existence of the securities does not necessarily mean that there is an active market in them after the initial placement or sale. Thus, we are by no means standing still.