samchain/econo-pairs-v1 huggingface dataset:
Before we make our final assessment, on which we base our monetary policy, we also weigh in other information on resource utilisation, for instance from the National Institute of Economic Research's business tendency surveys or from publications of shortages in the labour market. This can also be a good idea as the macro data that forms a basis for the method-based estimates, such as GDP growth, is often changed afterwards as a result of revisions to statistics. The most recent revisions have led, for instance, to an upward adjustment in both GDP and productivity for the greater part of the 1990s. The development of productivity and the labour supply I implied in my introductory discussion that the potential growth capacity of the economy is determined by the constant developments in technology that occur in a market economy and by the trend increase in production factors. A central element in this context is the labour productivity trend measured as GDP per hour worked. This increases through technological progress (e.g. as machines become more modern) or through the addition of real capital (a long-term extension of the production apparatus). If the labour supply itself also shows a change trend over time, this must be taken into account. The potential growth rate of the economy can therefore be calculated as the total historical growth in labour productivity and labour supply. As I will soon show, however, it is often difficult even afterwards to distinguish lasting trends from those of a more temporary nature, e.g.

The calculated growth in working hours is based on Statistics Sweden's forecast of the Swedish population up to 2050 and fixes other determining parameters at the 2002 level. The average increase in working hours amounted to approximately 0.4 per cent during the period 1981-2001. The calculated series' average increase 2002-2050 stops at a modest 0.01 per cent; in practice almost no increase at all. Conclusion I shall conclude with a summary. A high long-term growth rate is one of the most important objectives of economic policy. It becomes easier to achieve almost all other political objectives if economic growth is good. There is greater scope for private consumption and wage formation is made easier. It becomes easier to finance public sector services such as health and welfare. Higher growth also gives greater scope in other political areas, such as environmental policy. In addition, the potential, long-term growth rate is a variable of essential significance for monetary policy. The Riksbank cannot itself influence the development of the economy's long-term growth rate;  BIS Review 16/2003  5  this is governed by other factors, primarily by how much we work and how efficient the economy is. But the potential growth rate to a great degree sets the framework for monetary policy. Simplified, one can say that our task is to keep actual production as close to potential production as possible. Then inflation will also come close to the target level.
Encik Abdul Rasheed Ghaffour: Sustainable development of affordable housing Keynote address by Mr Encik Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Dialogue on “Sustainable Development of Affordable Housing”, Kuala Lumpur, 4 July 2017. * * * I am sure many of us here can still remember when we set out to buy our first house, which may be between 20 to 30 years ago. Back then, a typical terrace house or a 3-bedroom apartment came at a price tag of between RM200,000 to RM300,000. The monthly repayment would be around RM1,200 to RM1,600. It was a big commitment. But it was manageable; it made financial sense, and it was affordable. That was many years ago. Those who are starting out today face much higher barriers to buying a house. The numbers speak for themselves. Lets take a widely used measure – the Median Multiple, for example. Under this measure, a house is considered affordable if the median house price is less than three times the median annual household income. For Malaysia, this ratio has consistently been above four since more than 10 years ago. In our major cities, the ratio can be as high as ten. Even if we look at other measures, the broad conclusion remains: housing in Malaysia is becoming less affordable. This dialogue on “Sustainable Development of Affordable Housing” is therefore very timely. Confucius once famously said that the strength of a nation derives from the integrity of the home.

Supervision and regulation of financial institutions was, by and large, a micro-prudential undertaking. Supervisors examined the resilience of individual institutions rather than that at 2/7  BIS central bankers' speeches  the systemic level. They were typically independent of the central bank. 3. The central bank provided a safeguard for the financial sector as the lender of last resort. It was assumed that this would protect solvent financial institutions from contagion, as failed firms were resolved. Much of the pre-GFC academic literature rested explicitly or implicitly on the belief that central bank independence was an unalloyed good. The more independent a central bank, the more effectively it could pursue its core price stability mandate. However, the GFC revealed weaknesses in each of these assumptions. 1. In order to meet their inflation targets, central banks needed to dramatically expand their toolkits and add numerous unconventional tools to them. The universal validity of divine coincidence broke down, because central bankers needed to choose between inflation at target and the economy at full capacity. As interest rates neared the zero lower bound, it started to become clear that central banks alone could not guarantee price stability or return the economy to full factor utilisation. This opened up room for fiscal policy and restored its key role in demand management, suggesting the need for coordination between the government and the central bank.
To maintain competitive strength, wage growth in Norway had to be on a par with wage growth among our trading partners when productivity growth in Norway was on a par with our trading partners. With the current monetary policy regime, the inflation target is the nominal anchor. According to updated national accounts figures, an inflation target of 2½ per cent and trend productivity growth of around 2 per cent imply annual nominal wage growth of about 4½ per cent. Wage growth that is lower than 4.5 per cent contributes to increased employment. The Swedish Trade Union Confederation’s recommendations to its members are based on the inflation target: “It is therefore in the interests of all wage earners to control total wage increases to avoid exceeding the level that is consistent with the inflation target defined by Sveriges Riksdag (Swedish parliament).”  Challenges facing the Norwegian business sector History has taught us that individual companies and individual industries in wealthy countries may be threatened by the emergence of producers from low-cost countries. Nevertheless, the emerging Asian economies have not posed a threat to industrialised countries' economies as a whole. On the contrary, growth in Asian economies has led to lower prices for a wider range of products. These countries have also gradually developed into important markets. We know from experience that competition from Japanese and then Korean shipyards was an important reason behind the downsizing of our own shipbuilding industry.

In the long run, output is determined by the supply of labour, capital and technology and by the ability to adapt, but in the short and medium term monetary policy can also have an impact on the real economy. The economy grows over time. Output will in some periods lie above trend growth and in others below trend.2 Stabilising output means seeking to maintain actual output near trend. There is one main monetary policy instrument: the interest rate. Interest rates are set with a view to achieving low and stable inflation, while at the same time seeking to avoid substantial variations in output and employment. In recent years, household income has shown solid growth, and household confidence has been high. Corporate earnings, however, have been low, and until recently enterprises have primarily focused on enhancing efficiency. The level of household borrowing is high, while enterprises are reducing debt. Credit developments are thus giving ambiguous signals to our interest-rate setting. The interest rate can be used to reduce credit demand. At present - with low interest rates abroad and a close link between domestic interest rates and the krone - a tighter monetary policy would restrain credit demand primarily because job security would be reduced. A flexible inflation targeting regime reduces the possibility of exposing households to a double shock in the form of higher unemployment and higher interest rates, as was the case at the beginning of the 1990s.
This only can occur with the support of a healthy financial sector, including a banking system that provides the needed volume of credit at interest rates that reflect the European Central Bank’s (ECB) provision of ample and low-cost liquidity. Over the course of the crisis the ECB has launched various measures to avert the risk of more severe ramifications from the financial crisis. In July the ECB introduced forward guidance, assuring the financial markets that its policy stance will remain accommodative and interest rates low for as long as necessary. As a matter of fact, the recent interest rate cut was consistent with this forward guidance. Throughout the crisis, the ECB has played an important role in ensuring, within its price stability mandate, the proper financing of the euro area economy in a context of subdued credit dynamics. A series of measures were introduced to ensure that banks can pass on low policy rates to the real economy, in particular where most needed. These measures include providing ample liquidity to euro area banks, reviewing the collateral framework, lengthening the maturity of operations to three years, and reducing redenomination risk in financial markets through the announcement of Outright Monetary Transactions. Over the longer term, further decisive steps are needed for the establishment of a genuine banking union, so as to further enhance the resilience of the banking sector, reduce financial fragmentation, and strengthen the institutional framework of the euro area.

Similarly, the level of unit labour costs is lower in Malta than in both the weaker and stronger groups, as will be discussed later. It is important that the public debate and the formulation of policy focus more closely on what is needed for Malta to remain aligned with the better performers. In the first two quarters of 2013, Malta’s GDP growth rate stood at 2.7%. Net exports have been the main source of expansion. The outlook is for stronger growth in 2014 as Malta continues to benefit from its competitiveness. The economy continues to diversify, creating high value added job opportunities. While some sectors have had to downsize, there has been a compensating expansion in other sectors, such as financial and other services. This is shown in Chart 4. An aspect that may go unnoticed is the role of the financial sector in the resilience of the Maltese economy and its alignment with the stronger group of countries. Financial soundness indicators confirm that Malta has a sound and robust banking sector. A three-way split of the banking sector distinguishes between the core domestic banks that are closely integrated with the domestic economy at one end and the international banks that conduct all  2  BIS central bankers’ speeches  their business abroad at the other end, along with a relatively small sector, the non-core domestic banks, in between, as shown in Chart 5.
This has helped keep macroeconomic imbalances under control, yet the flipside of the coin is that the pace of real convergence was slowed by these powerful constraints, at least in the aforementioned case of Bulgaria. Consequently, it can be said that both approaches have benefits and drawbacks and that the story of these economies on their catching-up journey is still far from over. I would point out that there are resources for all these economies to continue to grow relatively fast. While convergence will go on, it is unsure at what pace, how linear and how sustainable it will be, and the surprises that the future has in store for us are difficult to foresee, just like the recent past differed from what we could have forecasted two decades earlier, for instance. The third lesson concerns the manner in which the global economic and financial crisis was weathered. With only one exception (Poland, which has not seen a single year of recession precisely because it managed to adequately combine exchange rate flexibility and fiscal discipline), all CEE economies witnessed periods of economic decline – more or less severe, shorter or longer – owing to the crisis, irrespective of their exchange rate or monetary policy regimes. The steepest decline was in Romania, which had to undergo the most painful fiscal adjustment.

Neither is it possible to say whether funded pension wealth mitigates the negative effects of expansionary monetary policy and elevated asset prices on wealth distribution. However, it is clear that no such mitigating effect can reasonably exist in most euro countries, as there is no funded pension wealth in these countries. Negative effects alleviated in Sweden The reasoning in this speech is not about three things. First, the introduction of the national supplementary pension system with associated National Pension Funds was controversial at the time.8 However, the National Pension Funds are now with us. Second, opinion is divided as to whether funded pension systems are to be preferred to paying pensions from day-to-day tax revenue. But, as I said, the pension funds are now with us. Third, the global downward trend in real interest rates has made it more difficult to receive return on wealth, especially if investors want to hold safe financial assets like government securities. The assets whose prices have increased are riskier. But this is not what the reasoning in this speech is about. This is what the speech is about: In Sweden, there is a comparatively large share of wealth in collective pension funds that has been built up with the help of mandatory contributions based on the labour income of individuals. This wealth is therefore more evenly distributed than other wealth. When asset prices rise, more people therefore benefit from the increase in wealth than if there had been no collective pension funds.
The capital shortfalls identified in the 2012 stress tests were corrected by recapitalisation measures that combined capital increases at some banks, burdensharing mechanisms and the contribution of public funds in eight banking groups that were unable to cover their needs by their own means. More recently, an appreciable number of banks have taken advantage of improved market conditions to issue various capital instruments (for an amount of over € billion since the start of the year). Moreover, banks have generally pursued a policy of containing dividend payouts and returns on deposits, following the recommendations made by the Banco de España. 2. The second main flaw in our financial system was a disproportionate exposure to assets with highly pro-cyclical credit quality and, in particular, to the real estate sector. This vulnerability was corrected through two main channels: by increasing the volume of development risk provisioning required in 2012 and, of course, by establishing SAREB, the external asset management company to which all the real estate exposure of the most vulnerable institutions was transferred. More recently, the level of coverage of credit portfolio risk was reinforced by the review, by the Banco de España, of the criteria for classifying refinanced and restructured loans by risk and, therefore, of the level of provisioning required. All these steps, on top of the traditionally conservative provisioning policies followed in Spain, reduced the latent risk on balance sheets and increased coverage, and are largely responsible for the Spanish banking sector’s generally satisfactory results in the asset quality review. 3.

The market for information and statistics There are market based statistics-producers in developed countries. The market agents are ready to pay a price in order to acquire such statistics. The producers of statistics conduct frequent market surveys, analyse results, supply them on line at a price and help market agents to create wealth. Unfortunately, in Sri Lanka, we do not have such market based statistics-producers. The collection and analysis of vital data that are useful to market agents are being done by a few governmental organisations. Like any other product supplied by the government, such data are also supplied as a public good free of charge. Even when the governmental agencies could sell statistics at a price, they do not venture to do so, because they are guided by such principles as “doing utmost benefit” to people as a social service. The country too, therefore, expects free goods from these governmental organisations. But this creates a problem known as “the agent-principal problem” in economics. The agent-principal problem The agent-principal problem is typical to any government service. It says that the agent who is a government bureau or a department or even a university does not have incentive to produce its output at its best. The principal who is the user of the service, on the other hand, is scattered and not in a position to influence the agent to improve quality.
In principle, by relating new information to our most recent forecast, market players are in a good position to form a picture of policy’s direction and we can see that when we compare their forecasts of the repo rate with our own. However, one should be aware that there is a risk that an unduly simple rule or decision-making model will oblige the central bank itself to disregard other relevant information. Monetary policy is not mechanics. For this reason we have elaborated our view in various respects. We have underscored that there are also grounds for considering the periods before as well as beyond the 1–2 year horizon on which we focus. Strictly speaking, it is a matter of optimising over all future time, including both inflation and output. For a long time now we have also declared that there are transitory factors we should disregard; more recently we noted that there can be grounds for weighing a prompt return to inflation’s targeted rate against the risk of avoidable fluctuations in output. Finally, we have said that departures from our simple rule may be warranted by problems with financial stability. What is important, however, is our ambition to provide a clear explanation and motivation for such departures. Given our ambitions in this field we would risk severe criticism if we were to do so without good arguments. I should also say that if our application of the rule would continuously be modified and altered, much of its communicative and educational value would be lost.

Before rounding off this discussion about monetary policy, let me also touch on the question of publication of minutes, which was brought up in the discussions earlier today. I think this is an issue that has been given too much prominence in recent discussions about clarity and transparency in monetary policy. Clearly, there are positive and negative aspects of publishing minutes. It can influence the internal discussions in both a positive and negative way. It can also have positive and negative effects on the way in which a central bank is perceived. I believe that the publication of minutes has been less important for the acceptance and credibility of monetary policy in Sweden during recent years than the policy framework with published forecasts and a policy rule. Nevertheless, I do think it was right of us to start to publish ours. Concluding remarks Let me conclude by underscoring that there are clearly major differences between the problems we were confronted with in Sweden after our crisis and those confronting European decision-makers today. We started from scratch without any credibility, while the euro was launched in a relatively good setting drawing on the credibility of the Bundesbank. But on the other hand, we had the advantage of having to manage only one country. After five years in European policy circles, I think I understand what Ottmar Issing means when he says that every single language reflects the unique circumstances in the country where it is spoken.
The tighter the jobs market, the harder it is for companies to fill vacancies, the greater their incentive to offer workers higher-paid positions and the stronger the incentives among workers to move into these positions.15,16 More productive firms are better able to offer higher rates of pay. This means more productive firms are also the ones most likely to expand, as they bid-away workers with higher pay offers. Less productive firms, by contrast, are unable to pay-up and are more likely lose workers and shrink. As workers climb the pay and productivity ladder, we would thus expect to see simultaneously higher levels of job moves, and higher rates of pay and productivity growth.17  11  Phillips (1953). For example, Broadbent (2017). For example, Pissarides (2000). 14 Melosi and Faccini (2019). 15 Moscarini and Postel-Vinay (2016) and Moscarini and Postel-Vinay (2018). 16 Abel, Tenreyro and Thwaites (2018) discuss the role of monopsony power in the labour market. 17 Moscarini and Postel-Vinay (2016) and Moscarini and Postel-Vinay (2018). 12 13  12  All speeches are available online at www.bankofengland.co.uk/speeches  12  The reverse is true during a slowdown. Then, rates of hiring fall and rates of job transition slow. Workers are either forced off the jobs ladder entirely (“unemployment”) or, in coordination with employers, the labour market outcome results in them moving to a lower rung of the pay and productivity ladder (“under-employment”). Lower-productivity firms expand while higher-productivity firms shrink.

Against this backdrop, we welcome two European texts that are currently being finalised (i) the Digital Operational Resilience Act (DORA), which aims, among other things, to bring critical service providers under the supervision of financial regulators; (ii) and the Digital Market Act (DMA), which is intended to ensure that service providers have equal access to the hardware and software components of electronic devices. These competition and sovereignty concerns should also be taken into account in the revision of PSD2. Secondly, the industrial lever. While our market is and must remain open, it is nonetheless essential to encourage innovation by European players. This is why, in the area of payments, the Banque de France actively supports the EPI2 initiative for a modern European solution. In conclusion, we can see that the changes taking place in the financial sector offer the prospect of even more accessible, efficient and innovative financial services, while at the same time raising new challenges for both market participants and public authorities. I am convinced that the only way to meet these challenges is through a multi-faceted approach, with cooperation between public and private players. That is why the Banque de France is fully committed to promoting innovation within a framework of trust: first, at the level of the regulatory framework and as a supervisor, then by facilitating private initiatives and mobilising the market, and lastly, as a driver and player in innovation.