samchain/econo-pairs-v1 huggingface dataset:
Nor is the softer version of this idea – converting this debt into perpetual bonds. Let us be clear on this: the public debt pile – which has risen sharply – will need to be paid back eventually… To do so, three combined levers will have to support the necessary debt reduction strategy: 2/5  BIS central bankers' speeches  1 / We will first need time in order not to phase out fiscal accommodation too early, and create cliff effects like in 2011–12. We should resume the debt-ratio reduction after growth returns to its pre-crisis level probably around 2022. But fiscal policy cannot simply be countercyclical in bad times; the same thinking needs to be applied in better times as well. 2/ Growth is indeed a key determinant in financing the debt inherited from the crisis. This leads me to the debate initiated early last year by O. Blanchard. First, the best way to ensure that the differential between the interest rate and the growth rate (r-g) remains negative – which is not granted forever, nor everywhere – is to increase g. And hence, let us listen to the balanced message of Blanchard: “public debt is bad, but not catastrophic. It can be used, but it should be used right.” Unfortunately, the quality and the content of public spending is too often the “blind spot” in the fiscal debate. In August, M. Draghi quietly coined the telling expression of “good debt”.

It is more extensive than the FOMC’s as it will cover, among many things, structural changes: climate change, financial stability; and the effects of digitalisation. The Eurosystem will take its time, as the Fed did, to consider the different alternatives. But we can already today shed some light on three key points, especially after the excellent “ECB Watchers” conference in Frankfurt on 30 September: 1. A dual mandate like the Fed’s and the ECB’s two-tiered mandate are actually more similar than they look. 2. There is some room for clarification in our inflation objective. 3. We should look again at the “second pillar” of the ECB and its possible link with the so-called “secondary” objectives. 1/5  BIS central bankers' speeches  1/ Our mandate puts a clear priority on price stability, and is not a dual mandate.
The SOMA Treasury portfolio currently has an average duration of about 7.5 years, compared with a precrisis level of about 2.6 years. Meanwhile, the duration risk of the entire domestic securities portfolio, including agency MBS and agency debt as well as Treasury securities, is equivalent to about $ trillion in 10-year Treasury securities (Figure 4). Purchases likely also work  8  From mid-August 2010 through September 2011, principal payments from holdings of agency debt and agency MBS were reinvested in longer-term Treasury securities. Since October 2011, they have been reinvested in agency MBS. 9  Ben S. Bernanke, “The Crisis and the Policy Response,” Stamp Lecture, London School of Economics, London, England, January 13, 2009. 10  A security’s duration captures the weighted average term to maturity of the security’s cash flows and provides a measure of the sensitivity of the security’s price to changes in interest rates. Duration (and therefore price risk) is generally greater for longer-maturity and lower-coupon securities. Agency MBS prices additionally carry prepayment risk, the risk associated with the uncertainty around the timing of principal cash flows owing to the fact that homeowners have the option to prepay their mortgages at any time. Because of this embedded option, agency MBS cash flows vary as interest rates change. 4  BIS central bankers’ speeches  through a signaling effect, to the extent that they are perceived as a credible signal of the central bank’s intentions regarding the future level of short-term interest rates.

2002, No 2, and Beyer, A., Gaspar, V., Gerberding, C. and Issing, O. (2009), “Opting out of the Great Inflation: German monetary policy after the break down of Bretton Woods”, Working Paper Series, No 1020, ECB, March. 26. ECB staff estimates find that the change in market pricing of the short-to-medium term interest rates and in survey evidence of Eurosystem balance sheet expectations between December 2021 and the assumptions implied in the September 2022 ECB staff projections would on average subtract around 1 percentage point from annual real GDP growth each year until 2024 (i.e. annual real GDP growth is estimated to be reduced by around one percentage point on average in 2022, 2023 and 2024). Since the September 2022 ECB staff projections, tightening expectations have further increased, implying a further impact on GDP growth. The estimated impact refers to the average across a set of models used by the ECB for policy simulations, including the NAWM-II model (Coenen, G., Karadi, P., Schmidt, S. and Warne, A. (2018), “The New Area-Wide Model II: an extended version of the ECB’s micro-founded model for forecasting and policy analysis with a financial sector“, Working Paper Series, No 2200, ECB, November (revised December 2019)), the ECB-BASE model (Angelini, E., Bokan, N., Christoffel, K., Ciccarelli, M. and Zimic, S. (2019), “Introducing ECB-BASE: The blueprint of the new ECB semi-structural model for the euro area”, Working Paper Series, No 2315, ECB, September) and the MMR model (Mazelis, F., Motto, R. and Ristiniemi, A.
The first wave of losses led banks to tighten margin requirements, effectively reducing financing available to the non-bank financial system, causing those institutions to deleverage through asset sales, driving a death spiral of falling asset prices and rising margin requirements. Such dynamics have now been mitigated through agreed minimum haircuts for securities financing transactions and the net stable funding ratio for banks. A simpler financial system As the crisis highlighted, opacity hides frailty. Why was subprime not contained? How did $ in credit losses ultimately cause well over $ in market losses? Because complexity obscured the link between ultimate creditor and debtor, it allowed false assumptions to develop that, when disabused, prompted panic. The mortgage originated by a bank was repackaged by a SIV, that financed it through ABCP, that was bought by a MMF, into which a retail investor placed their savings. It occurred to no one in the chain that the absence of a monitor would influence credit performance. The whole model was based on continual rollover. When subprime losses exposed the misalignment of incentives between loan originators and investors in asset-based securities, the whole system collapsed, imploding core funding markets for banks. Risks that had ostensibly been moved outside the banking system or diversified away were in fact just hiding and, when crisis struck, they came crashing back onto the balance sheets at the core of the system. This complexity is being addressed.

It has been severely tested by: taxpayer bail-outs of systemic institutions; rewards perceived as undeserved; a perception that clients have become counterparties; and egregious examples of misconduct and rigging of markets. Without that licence, the door will be opened to a level of regulation that constrains the ability of finance to innovate and support growth and trade efficiently. The licence will require consistent exemplary behaviour, and finance to have a clear sense of its purpose not as an end in itself, but as a means to promote investment, innovation, growth and prosperity. It is not merely that we should want to follow Churchill’s wish to see “finance less proud and industry more content”. We want to see industry content and finance taking justifiable pride in its contribution to society. That is far from straightforward when, even six years on from the crisis and public bailouts, triggers for public opprobrium are plentiful. Last week, the UK’s Financial Conduct Authority, US CFTC and Swiss FINMA fined six banks $ for misconduct in FX markets: misconduct that went on long after banks had already been fined for abusing interbank interest rate benchmarks. The repeated nature of these fines demonstrates that financial penalties alone are not sufficient to address the issues raised. Fundamental change is needed to institutional culture, to compensation arrangements and to markets.19 As Bill Dudley and my colleague Minouche Shafik have argued, the succession of scandals mean it is simply untenable now to argue that the problem is one of a few bad apples.
% Total  1990  1995  2002  7222  67  63  USA  1222  12  11  UE15  44  39  38  Developing countries  28  33  37  Asia  13  19  20  Industrialized world  countries  Source: IMF Direction of Trade Statistics  Global capital flows keep growing at an even higher rate, the share of global FDI in the global GDP increased from 8% in 1989 to 22.1% in 2003, whereas foreign assets as percentage of the GDP increased from 62.6% of the GDP to 186.1% of the GDP, respectively. Numerous empirical studies have demonstrated that outsourcing and off-shoring entail increased competitiveness of enterprises, which raise their employment level abroad in subsidiary companies and intensify their expansion on foreign markets, thus being forced to create workplaces, often much better paid and requiring higher qualifications also in parent undertakings. Thus, the growth of employment abroad is accompanied by the same at home. 10 An analysis of the impact of off-shoring services to India in the years 2000 – 2003 on the US labour market shows that, for example, jobs for programmers of low value added were lost in favour of India; however the total employment in the IT services industry grew rapidly. 11 As it has been observed, the role of trade and capital links among enterprises in various countries strengthened over the recent years.

This means that if the Old Continent does not respond appropriately to the globalization challenges, in a few dozen years, all major global decisions will be made outside Europe, especially if the integration tendencies are continued in Asia, including the possible adoption of a single currency, which may be tentatively called the “asian”. 4 Thirdly, the share of Africa in the world's population will be a mirror image of the European trends and will increase almost threefold. It is still a very poor continent, of an unfavourable climate and poorly qualified workforce. However, in my opinion, the African countries will join the process of globalization in the manufacturing and services sectors sooner than it is expected, and some countries of the African continent may experience a very high economic growth rate in the decades to come, if their key political decision-makers take the chance that the globalization process gives. 3  For estimates please refer to http://esa.un.org/unpp/  4  On 4 May 2006 in Hyderabad, India during the 39th annual meeting of the Asian Development Bank a consensus was reached by the finance ministers of Japan, China, and South Korea. Han Ducksoo, Jin Renqing and Sadakazu Tanigaki agreed that under the Chiang Mai initiative, joint research will be conducted concerning the possibility of introducing the single currency in Asia. During that meeting, the parties decided to join the forces of the Asian countries to change the allocation of voting rights in the International Monetary Fund.
Richard W Fisher: Monetary policy and an annual Texas economic review Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Dallas Business Club, Dallas, Texas, 3 December 2014. *  *  *  The charts can be found at the Federal Reserve Bank of Dallas’ website The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Alden [McCall]. I feel right at home in a room full of MBAs. As many of you know, I am not a PhD economist like the majority of my colleagues sitting on the Federal Open Market Committee (FOMC). I admire my colleagues tremendously for their intellectual capacity and their well-trained insights into the dismal science of economics and the arcana of monetary policy, but I am proud of just being an MBA. I was privileged to attend all those schools Alden mentioned: the Naval Academy, Harvard and Oxford. But I feel that the MBA program at Stanford Business School prepared me best for my career as a banker, a money market operator, and for the past decade, a policymaker at the Federal Reserve. (Though plebe year at Annapolis probably best equipped me for the sleep deprivation and the pressure we operated under during the financial crisis). So Alden, I begin with a tip of the hat to the MBAs you have assembled this evening.

Yet although the decline in residential demand has been very abrupt, lower interest rates and the fall in house prices have placed affordability indicators at more moderate levels, which is helping to stabilise real estate purchases in recent months. In the case of lending to the private sector, we have witnessed increasingly negligible and even negative growth rates, and this pattern will probably prevail over the coming quarters. These developments in lending have a most significant cyclical component, accentuated by  2  BIS Review 151/2009  the tension on international financial markets. After the strong increase in household and corporate debt ratios in the previous upturn, it was inevitable these ratios would fall to improve the financial position of households and firms, and to assist in the resumption of a sustainable path of spending. The strong adjustment in spending is also bringing about a sharp reduction in the external deficit which, after posting a figure close to 10% of GDP in 2007, may be below 5% of GDP in 2009. The adjustment is based, above all, on the decline in imports and on lower commodities prices; accordingly, for this correction to firm when demand picks up, a more substantial contribution by exports will be needed and, in this connection, our export base and the productivity of our companies must continue to be strengthened. In terms of inflation, we are also seeing a significant correction, as there has been a negative inflation differential with the euro area for almost a year.
In this case, a third and independent party, such as the IMF or OECD, regularly monitors and assesses the economic policies of its members. The ECB participates in the surveillance process for policies falling within its competence (e.g. monetary policy, payment systems oversight). This means that, whenever monetary policy is under surveillance, the ECB is solely responsible for its interaction with the IMF and OECD. Standards and codes recently adopted by the IMF and other relevant international institutions are a way of defining best policy practices and enhancing transparency in the field of monetary and financial policy. In this respect, the ECB’s involvement in regular surveillance further strengthens its accountability through being transparent. Third, in the area of macroeconomic policies, consultation and surveillance are the only forms of international cooperation that are relevant to the Eurosystem. Any form of ex ante policy coordination of monetary with other macroeconomic policies would neither be advisable for the Eurosystem nor be compatible with the ECB’s mandate and independence. Apart from the well-known recognition and decision lags in policy-making, attempts to coordinate ex ante would not only blur the specific responsibilities of individual policy-makers, but also reduce their accountability. In determining its monetary policy stance, the ECB should and does take into account all relevant information. It cannot let its policy solely be determined by the current and future course of other policies. This could easily compromise the maintenance of price stability.

However, I believe there is a risk of now leaning back and assuming that all of the problems will be automatically resolved, or perhaps are already resolved. This is not a quick fix. Making decisions in the field of macroprudential policy is no easy task and Finansinspektionen has a difficult workload ahead. Many people have questioned the efficiency and expediency of the policy rate in this context. But, of course, there are a number of questions regarding macroprudential policy as well. An obvious complication is that macroprudential policy is a new field. There is rather limited practical experience of the effects of macroprudential policy measures and nor is academic research able to provide any clear guidance as yet. This means that, at least during a transitional period, there will be considerable uncertainty over the effects of the measures taken. The objective of macroprudential policy – to prevent risks to the financial system as a whole – is moreover clearer on paper than in practice. It is of course not easy to know when the system is sufficiently resilient or if some form of imbalance is building up, which the crisis clearly illustrated. There are no numerical targets here, and determining when a certain deviation has begun to be abnormal is rather difficult.10 Finansinspektionen will probably also need to struggle on occasion with the scepticism of general opinion towards the need for macroprudential measures. There are different reasons for this.
This level will still provide solid profitability for many investment projects in the petroleum sector and continued large surpluses on the current account and in government finances. The krone exchange rate, measured against our most important trading partners, has appreciated by about 7 per cent since the spring of 2000. However, the krone exchange rate is about 2.5 per cent weaker than in 1990 and at the same level as in the mid-1990s. Traditional merchandise exports remained high in the first half of 2001 but exhibited a weaker trend in the second half of the year. Foreign trade figures for the fourth quarter of 2001 indicate that the decline in export volumes may have come to a halt, although export prices are still falling. Consumption indicators suggest strong growth in private consumption. Credit growth has slowed somewhat due to reduced borrowing by enterprises. Household borrowing, on the other hand, has increased further. Developments in debt may also influence financial stability. Although borrowing by enterprises appears to be declining, their debt burden remains high. This reduces enterprises’ ability to cope with downturns. The household debt burden is increasing, but the level is low. These developments are due in particular to the housing market, with high turnover and high price rises. Experience shows that private sector debt tends to increase at a particularly fast pace during upturns. Higher asset prices may be a driving force.

These inflationary impulses will be influenced by developments in international commodity and consumer prices and by the exchange rate. The inflation target provides the framework for monetary policy. Norges Bank’s Executive Board makes decisions about changes in the interest rate. The members of the Executive Board are collectively responsible for the Bank’s decisions. The Executive Board meets every three weeks. At every second meeting, the Executive Board discusses monetary policy in depth. Decisions regarding changes in the interest rate will normally be made at these monetary policy meetings. Three times a year, Norges Bank prepares inflation reports in which it presents its projections for inflation and economic developments in the years ahead. The Executive Board discusses the economic outlook at a separate meeting three weeks before the Inflation Report is presented. On the basis of preliminary projections for the report, the Executive Board assesses the outlook for inflation two years ahead and the uncertainty surrounding these projections. The following day, the Executive Board summarises its discussions and assesses the consequences for monetary policy for the next four months. This assessment constitutes an important internal reference when the Executive Board later makes a decision regarding the interest rate. It will also provide the basis for our external communication through speeches and the media. BIS Review 8/2002  1  The risk of a deep recession in the world economy appears to have diminished. There is still, however, considerable uncertainty surrounding both the timing and the strength of the recovery.
** Tobacco and Gold: Alcoholic beverages, tobacco products and gold. Source: TURKSTAT, CBT. The annual rate of increase in services prices declined further in the first half of the year amid weakening cost pressures and also because of the lagged effects of the contraction in domestic demand. It is worth noting that annual inflation in services decelerated across all subcategories (Figure 6). Services prices are expected to edge further down in the coming months. BIS Review 103/2009  3  Figure 6: Services Prices (Percentage Change, First Six Months) 11 10 9 8  2006-07 average 2008 2009  7 6 5 4 3 2 1 0 Services  Other Services  Transport services  Rent  Restaurant services  Source: TURKSTAT, CBT. As I believe that it is essential to decouple movements of the core inflation indicators and the likely effects of tax cuts to better understand the underlying trend of inflation and to evaluate developments more effectively, I would like to further clarify these developments. By the end of the second quarter of 2009, annual inflation measured by the CPI excluding energy, unprocessed food, alcoholic beverages, tobacco and gold (H index) declined to 2.31 percent while annual inflation measured by the I index, which excludes processed food prices, dropped to 2.98 percent. Although tax cuts contributed significantly to the decline of the core inflation indicators, figures corrected for tax adjustments also confirm that the underlying trend of inflation is downwards, as illustrated in the slide (Figure 7).

It is an irrefutable empirical fact that inflation variability rises with the level of inflation, which in turn increases uncertainty for investors and long-term interest rates through a rise in the inflation risk premium. A permanent increase in inflation curtails, rather than stimulates, long-term growth. A considerable body of empirical research finds that the Phillips curve has a negative bent in the long run: inflation and inflation volatility penalise capital formation and thus detract from the economy’s growth potential. Empirical evidence confirms this negative relationship, with a 100 basis point permanent increase in inflation being associated with a 10–30 basis point decrease in trend output  2  BIS Review 22/2010  growth. Hence, if this is applied to the euro area, a 4% inflation target would shave no less than half a percentage point per year off trend growth! As for using monetary policy to manage macroeconomic risk, it should be recognised that this would introduce harmful asymmetries. It avoids policy restriction when positive supplyside shocks reduce inflation, fuelling asset price booms; and when the asset price boom finally turns into a bust, it leads central banks to overreact to negative demand-side shocks. So, financial instability meets two formidable multipliers, the first being a pro-cyclical monetary response to expansionary disinflations in good times and the second being moral hazard in financial markets, namely the expectation that the central bank will aggressively protect the markets from “tail events” in bad times. These expectations encourage markets to tend towards risky strategies, over-exposures and exuberance.