samchain/econo-pairs-v1 huggingface dataset:
A number of empirical studies have looked at the effects of home working on productivity.5 Pre-Covid, the lion’s share of these studies suggested home-working improved productivity. As one example, Bloom et al (2015) conducted a randomised control trial in a call centre of a Chinese travel company, randomly allocating some workers to work from home and others to work in the office, before measuring their respective performance. Home-working improved worker productivity by around 13% almost a day’s extra output, a massive gain. Interestingly, after the trial the company allowed everyone who wanted to work from home to do so. That improved company performance by 22%. These productivity effects do not appear to be fixed across different demographics, firms, tasks and sectors.6 For example, studies suggest productivity gains from home-working are largest for creative tasks, perhaps reflecting the benefits of a quieter, less distracting home-working environment.7 It is also worth saying that some of the evidence of productivity gains may be biased upwards by self-selection, with those opting to work from home more likely to be able to do so productively. When it comes to the productivity effects of home-working during the Covid crisis, the evidence – while thinner – points in a different direction.

Just as the short-term productivity cost of an abrupt shift to home-working might be overstated, so too might the short-term happiness benefits. In particular, let me discuss two longer-term consequences of the shift to home-working whose effects may not yet be fully visible but which could, over time, detract from both our productivity and our happiness at work. The Effects on Creativity and Relationships These two factors are working relationships (or what economists sometimes call social capital) and workplace creativity (or what economists call intellectual capital). Modern economic theory, and a growing body of empirical evidence, gives both factors a prominent role in explaining why individuals thrive, economies grow and societies succeed.20 It is well-established that creativity fosters innovation and that in turn fuels economic growth. That was the story of the Industrial Revolution. What is new is our understanding of how the work environment plays a crucial role in nurturing creativity.21 For example, the absence of distraction and noise is one important factor fostering creativity. Being in “flow” requires a degree of cognitive tunnelling.22 For many people, homeworking provides that quieter, less distracting environment where tunnelling is easier and creativity fostered. 19  Gajendran and Harrison (2007). Haldane (2018a, 2020). Haldane (2018b). 22 Newport (2014) terms this ‘tunnelling’ as deep work and provides a comprehensive overview of the concepts and research. 20 21  7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  But lack of distraction and noise is not always and everywhere a good thing, including the creativity.
Indeed there will be inevitable calls by some vested interests to turn back. To give in, to drop out, would be a tragedy. The prize for running the longer race is great. By fixing the fault lines that caused the last crisis we have created strong foundations for a truly global financial system that can benefit us all. Now we must have the courage to seize that opportunity and build on those foundations. Today I will refresh the case for financial reform and set out what I believe should be the drivers of the future reform agenda. But before turning to that next stage, allow me to take stock of the immense amount that has been accomplished since the crisis.1 Completing the job of fixing the fault lines A safer financial system Banks are now much more resilient. They have more capital, more liquidity and are less susceptible to procyclical spirals. Capital requirements for banks are much higher, as are risk weights and the quality of bank capital. In all, new capital requirements are at least seven times the pre-crisis standards for most banks. For globally systemic banks, they are more than ten times.2 Large internationally active banks are on course to meet the new requirements 4 years ahead of the 2019 deadline. Despite the scale of the changes, the aggregate shortfall of those banks that still have shortfalls was € at end 2013, having been € two years ago. It is just as clear that banks’ liquidity positions before the crisis were precarious.

So much so, that we actually formed a taskforce to look into that possibility for ASEAN. However, that seminal work reached a very firm conclusion, which was accepted by regional policymakers. The conclusion was that ASEAN was not ready for a currency union, and will not ready for a long time to come. It was therefore not a goal that ASEAN should pursue as other forms of integration provided much more opportunity for increasing regional economic welfare. What should the role of financial integration be within ASEAN? Essentially, it is as a catalyst for economic growth. Finance is the bridge that will facilitate the movement of trade and investment flows across the borders of regional economies. This is recognised and accepted by all ASEAN economies. However, given the reality of the differing stages of financial development, and the risks associated with premature financial openness, the outcome has been the adoption of a flexible approach that enables its members to pace their integration based on their state of readiness. For example, in March 2015, the ASEAN Banking Integration Framework was launched. It adopts a bilateral approach to banking integration. Countries can negotiate reciprocative agreements that would allow Qualified ASEAN Banks to operate in each other’s territory. The Financial Integration Blueprint also recognises the risks of financial integration as well as the need to ensure that all sectors of society benefit from financial integration.
In this way, the period of growth can probably be extended for several years and the employment ratio can also increase markedly then. Difficult balance to strike for monetary policy The Riksbank must strike a balance in monetary policy so that growth is not dampened unnecessarily but neither becomes so strong that inflation accelerates. The difficulties lie in foreseeing the growth of demand and its relation to inflation over a period of a couple of years to come. A change in interest rates actually has an effect with a considerable time lag, its full impact only being felt after a couple of years. If changes in interest rates come too late, the consequences will be unnecessarily large fluctuations in growth. However, experience shows that if inflation is allowed to rise, there is a great risk that the higher inflation will persist and that inflation expectations will be driven up. The consequence of the Riksbank’s “wait-and-see” standpoint would therefore be to imperil the credibility that has been laboriously achieved - or even lose it. Considerably greater restraint would then be required than if inflation had been stopped in time. In order to avoid this, the Riksbank may need to 1  BIS Review 126/1999  increase interest rates before registered inflation shows signs of increasing, which will confront us with an educational problem. If the Riksbank wishes to safeguard growth, employment, and a high use of resources in other respects, monetary policy must be adapted in time.

It also begs the question of what is preventing the diffusion of processes and technologies used in one firm to other firms operating in a similar region or sector. Are there barriers to technological diffusion, legal or competitive, which are stymieing productivity trickle-down? Are first-mover advantages and economies of scale simply larger for frontier firms these days, entrenching their advantages? Could more be done by frontier companies to promulgate their practices to companies lower down the supply-chain? I do not know the answers. But finding them strikes me as key for unlocking the growth and productivity potential of the long tail of companies and hence of UK PLC. Conclusion  The UK, perhaps more than any other country in the European Union, is an agglomeration of quite different micro-economies – micro-economies of high and low incomes, high and low skills, high and low investment, high and low productivities, Red and Blue Car regions. Closing these gaps would not only boost the size of the aggregate economic pie, but would lead to a more equitable distribution of its slices. 15  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  15  As much as anywhere in the UK, the North-East exemplifies some of those challenges. Incomes and productivities are towards the bottom of the UK league table and unemployment rates towards the top. In many ways it could be seen as a Red Car region. With these differences so large, it would be easy to view the UK glass, economically and socially, as half-empty.
Generally speaking, structural reforms are always and everywhere difficult to implement in the face of vested interests. Depending partly on where you are in the business cycle, there is often a strong temptation to defer them to a later date. This is because of concerns about short-term negative impacts on the economy. Despite all those downsides, however, I still believe that there is no better time than now to put necessary reforms in motion. Short-term negative impacts are often overstated. They should not be used as an excuse to oppose reforms. If structural reforms are well designed, they will increase rather than decrease current demand, because they improve the prospects of future profits for businesses and hence permanent income for households. 19 That’s all from me tonight. Once I have completed my assignment to talk about growth in Asia, I need to put on my central bank governor’s cap again. If I may use Professor Lucas’s quote again with a slight modification, “Once one starts to think about deflation or inflation, it is hard to think about anything else.” Therefore, please give me your comments and questions before I put my central banker’s cap back on. Thank you. 19  Benoȋt Cœuré, “Structural Reforms: Learning the Right Lessons from the Crisis,” Speech at the Bank of Latvia Economic Conference, October 17, 2014.

To date, more than 14,000 SMEs have registered in the SME Business Directory of the Portal. In strengthening the financial infrastructure for SMEs, Bank Negara Malaysia has also established the Small Debt Resolution Scheme where viable SMEs that are constrained by non-performing loans are assisted through loan restructuring and the provision of additional funding. In addition, through EXIM Bank, two new trade financing products for SMEs have been introduced in 2006. The Census that was completed in 2005 had however, indicated that about 80% of SMEs are micro enterprises which had limited access to financing from the formal financial system to maintain and expand their businesses. To meet the financing needs of this key segment of the SMEs, microfinancing has now been established in our financial system. A number of financial institutions are participating in providing fast, flexible and convenient access to financing to individuals and micro enterprises for their business activities. The various measures that have been undertaken have now already yielded positive results. SMEs today have had greater access to financing, with the banking institutions being the main source of financing. In 2006, RM40 billion in new loans was approved to more than 84,000 SME accounts. Of this, the Islamic banking institutions provided RM5 billion in new financing, compared with RM3 billion in 2005. The share of SME loans of the banking institutions has increased from 30% of total business loans at end-1999 to 45% at end-2006. Total SME outstanding loans of the banking institutions have now breached the RM100 billion level in 2006.
Michael C Bonello: The institutional, economic and monetary policy implications of EMU on countries applying for accession to the EU Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at a workshop organised by the University of Malta, Gozo Centre, Gozo, 16 November 2002. *  *  *  I guess we are by now all too familiar with the fact that a country’s eligibility to join the European Union (EU) rests on satisfying the Copenhagen criteria, including the obligation to achieve compliance with the EU acquis and to show a commitment to the aims of the Union, including those relating to EMU. Indeed, unlike Denmark and the United Kingdom, the current wave of accession countries are all expected to join EMU eventually. This implies that they will also have to join the Exchange Rate Mechanism (ERM II). Participation in ERM II is in fact one of the Maastricht criteria which must be met before admission to the euro area. This requires the national currency to remain within the fluctuation margins of this mechanism for at least two years without resorting to a devaluation against the euro. What makes ERM II more important than the other Maastricht criteria? Participation in ERM II is not the only criterion which the accession countries will have to meet before being able to join EMU.

In addition, the commitment to refrain from excessive deficits is also a necessary condition for the success of EMU itself. This is the case because if such a deficit occurs in one of the larger euro area members, the inflationary pressures resulting from that deficit could instil an upward bias in ECB interest rates. For accession countries, contained public spending and flexible labour markets are also necessary from the point of view of achieving nominal and real economic convergence. Excessive deficits would not only accentuate inflation differentials, undermining the ability of these countries to fulfil the Maastricht criteria, but could also crowd out private sector investments, delaying progress in structural reforms and convergence in income levels. Given that large deficits and labour market rigidities tend to weaken a country’s ability to achieve both nominal and real economic convergence, policies to address these issues are an integral part of the preparations which accession countries are making in advance of EMU. The rationale behind ERM II ERM II is a fixed exchange rate regime, involving the adoption of a central exchange rate against the euro in agreement with the ECB. This rate is then allowed to fluctuate within specified margins, normally +/- 15%, but narrower bands may be adopted subject to mutual agreement.
Such a poor calibration would run afoul of the Brier-based scoring system used in the IARPA tournament. 13 It is clear that extremizing the results lessens the impact of the poor calibration on the scoring system, but it leaves open the question of whether a better calibration is possible. Another financial market indicator we could look at is the stock market. As Paul Samuelson famously stated, the stock market has predicted nine of the last five recessions. An alternative statement—and this is also true of yield curve inversions—is that no U.S. recession has occurred since the Second World War without a yield curve inversion or stock market correction (or worse) proceeding it. As a recent San Francisco Fed Economic Letter carefully illustrated, yield curve inversions have the additional record of indicating only one false positive in the U.S., during the mid-1960s.14 If we cared equally about forecasting recessions and expansions, these properties would be well-reflected in the Brier score; however, if we view recessions—or more accurately, elevated probabilities of a recession—as more concerning than elevated probabilities of an expansion, then Brier scoring is not sufficient. As Tetlock writes, "One problem is that Brier scores treat false alarms the same as misses."

ACT is dedicated to promoting awareness of how bias and complexity impede a central bank's ability to achieve its objectives, and to establishing alternative mindsets and methods to confront these challenges. One of ACT's key initiatives, inspired by the learnings in Superforecasting, is implementing a tournament at the New York Fed with the goal of giving Bank staff the opportunity to assess their use of the practices for which Tetlock advocates. In conclusion, models and quantitative tools, like the ones we are discussing, can take us a long way. But they are designed to answer specific questions that are at best strong building blocks to the broader questions that policymakers grapple with. Being rigorous in our evaluation of these building blocks is critical, as is openness to other forms of information and approaches. The insights from Superforecasting are relevant for both the evaluation of specific tools and asking questions not addressed by these tools. Tetlock ends the book with Ten Commandments for good forecasting. However, in the spirit of being humble around forecasting problems, he adds an eleventh commandment: "Don't treat commandments as commandments." A version of this I would like to leave you with is to not treat any particular model or quantitative tool as the whole truth; no matter how sophisticated the underlying technical details may be, keep questioning assumptions about how the economy works and be always open to contradictory information, not just confirming evidence.
Secondly, the difficulty of delivering an appropriate “policy-mix”, the monetary policy being by definition concentrated in the hands of the ECB and the ESCB when, at the same time, the absence of a federal government and therefore of a federal budget leaves the fiscal policy of the Union in the hands of 15 different governments. Thirdly, the difficulty of absorbing “shocks” in a particular member economy, whether this shock is of a domestic or an external nature. This difficulty stems in particular from the absence of the automatic stabilizers of fiscal transfers because there is no federal budget. Fourthly, it is stressed that there are important costs associated with the transition towards EMU, namely the necessity to reduce overall fiscal deficits in the run-up to the single currency in accordance with the Maastricht fiscal criteria and the necessity to embark on an excessively tough monetary policy after the creation of the single currency to ensure the global credibility of the ECB, which in this view will start from scratch. Let me respond to these criticisms and try to demonstrate that the Europeans have embarked upon a coherent economic and monetary strategy, responding as accurately as possible to the various questions I have just listed and paying due attention to the special nature of the European endeavour.

Further, a new Guide to Banking Supervision has been drafted, setting down the procedures all SSM members are to follow. The SSM has been defined as an integrated system of bank surveillance, which will combine the leadership of the ECB with the active participation of national supervisory authorities. In any event, arrangements are in place to ensure that the assumption of these new functions by the ECB will not clash with its monetary policy responsibilities. As of June 2014, total euro area bank assets amounted to € trillion. Given the very high number of credit institutions (some 3,500) established in the euro area, the SSM regulation draws a distinction between “significant” institutions, which will be supervised directly by the ECB, and “less significant” institutions, which will remain the responsibility of national authorities and which the ECB will indirectly supervise. Finally, a list of 120 significant institutions has been drawn up, 15 of which are Spanish (14 once a merger currently under way has been completed), accounting for just over 90% of the assets of deposit institutions in Spain. BIS central bankers’ speeches  5  The 120 “significant” institutions represent 80–85% of total euro area bank assets; the Spanish banks that will be directly supervised by the SSM account for 14% of the total assets of these 120 significant institutions.
The SNB has to manage a large volume of foreign exchange reserves. So it needs to find fairly large markets to absorb these volumes, while retaining a high level of liquidity, which narrows the range of available assets considerably. It therefore places particular emphasis on researching new investment opportunities, whether these be equities, currencies or markets. Hence, for example, the recent introduction of new currencies or the inclusion of additional countries, in order to better achieve a satisfactory degree of diversification. Third challenge: Investing our portfolio without influencing the markets. The rapid growth of our reserves required us to invest and reinvest large amounts. Amounts of this magnitude can have an impact on the stock, bond or money markets. This is why the SNB  4  BIS central bankers’ speeches  operates on the major markets and does not invest in niche markets. Moreover, to ensure that our investments do not destabilise the markets, we place amounts which they can easily absorb. This implies that any diversification after a large inflow of foreign exchange reserves must be gradual. We are also engaged in active discussion with our partners, the central banks of the countries where we invest, and we are pursuing an information policy in this area that is as transparent as possible. Fourth challenge: Maintaining an optimal proportion of equities in our portfolio. Despite the recent significant inflow of foreign exchange reserves, we have increased the proportion of equities, and it now stands at nearly 12%.

Inflation forecast I shall now turn to the course of inflation and our new inflation forecast. Our inflation forecast of June 2002 (the green dash-dotted curve in the graph) shows that at that time we assumed, based on a stable three-month Libor rate of 1.25%, that inflation would gradually rise to 1.9% in the first quarter 2005. Year-on-year inflation, as measured by the national consumer price index, dropped to 0.3% in the third quarter 2002 from 0.7% in the second quarter. In October and November it rose to approximately 1%. These fluctuations are due mainly to changes in the exact points in time when data on clearance sales prices are collected. This is also the main reason why our forecast of June 2002 over-estimated the development of inflation in the third quarter 2002. Our new inflation forecast (red dashed curve) is based on the assumption that growth in the US will pick up again from the second quarter 2003 onward. The US economy is likely to achieve its growth potential stepwise until the beginning of 2004. In the EU, the upswing will take a little longer. We are not expecting a significant acceleration of growth before the end of 2003. We assume that the  BIS Review 73/2002  1  dollar/euro rate will remain at about the current level and that the oil price will be around $ per barrel.