samchain/econo-pairs-v1 huggingface dataset:
The outcome was similar to the risk scenario that we presented in a Monetary Policy Report in February 2007 before the collective bargaining process began. This undermined the possibility to conduct a relatively expansionary monetary policy with low interest rates and still reach the inflation target. 4  BIS Review 154/2008  Somewhat higher wage increases in 2007-2009 than in the preceding agreement period In February 2007, the Riksbank's assessment was that hourly wages would increase by 3.9 per cent per year in the three-year period 2007-2009. When more information on the result of the rounds of collective bargaining became available in June 2007, this assessment was increased to 4.2 per cent per year. My personal belief was that hourly wages would increase more than this. Since the spring of 2007, the development of the economy has been much weaker than we expected. The crisis on the financial markets has entailed a dramatic downturn in the US economy which has had a dampening effect on economic development in other countries, including Sweden. This can in turn have made the companies more cost conscious and less willing to employ new personnel and increase wages above the levels stipulated in the agreements. It is therefore reasonable to assume that there will be lower wage increases during the threeyear agreement period than we could predict in 2007.

The argument is that the same restraining effect on wage formation could now be achieved if the service sector sets the norm rather than the manufacturing industry. The idea is that if the service sector sets the norm too high, the Riksbank would increase the interest rate and that this would dampen economic activity, employment and inflation in the same way as if the manufacturing industry set the norm too high and lost international competitiveness. The sector exposed to international competition should set the norm My own view is that the sector exposed to international competition still has a central role to play in wage formation. But this sector should not be equated with the manufacturing industry. Other sectors are also exposed to international competition to varying degrees. It is also important that there is consensus between the negotiating organisations on what part of the economy should set the norm. I do not think that there is any major difference between the previous situation with a fixed exchange rate and the present situation with a floating exchange rate. Our inflation target is largely the same as in other countries. As we saw earlier, inflation over the last 15 years has also been more or less the same in Sweden and Germany. The only way that we can have higher wage increases is if the development of productivity in Sweden is higher than in other countries.
Rodrigo Vergara: Chile’s March 2014 Monetary Policy Report Presentation by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, of the Monetary Policy Report before the Honorable Senate of the Republic, Santiago de Chile, 31 March 2014. *  *  *  Accompanying charts can be found at the end of the speech. Mr. President of the Senate’s Finance Commission, Senator Ricardo Lagos-Weber. Senators members of this Commission, ladies, gentlemen, Thank you for your invitation to share with you the vision of the Central Bank Board about the recent macroeconomic developments, its outlook and implications for monetary policy. The detail of this vision is contained in our March 2014 Monetary Policy Report. A year ago, when the Board gathered with this Commission on a similar occasion, we underscored the importance of investment in the Chilean economy’s strength and its connection with the global cycle of mining investments. We then stated that the implementation of a large number of projects in mining and related sectors, such as energy, had provided a boom in investment. This had resulted in greater domestic spending, putting pressure on installed capacity utilization and the labor market, as well as on imports and the current-account deficit of the balance of payments. The Board also noted that it foresaw at the time a gradual maturation of said investment cycle and expected a normalization of economic growth during 2013, after several years of expanding above trend.

The baseline scenario reflects those events that are believed to be the most likely to occur with the information at hand at the closing of this Report. There are risk scenarios, however, which if materialized, may reshape the macroeconomic environment and, therefore, may modify the course of monetary policy. On this opportunity, having evaluated the alternative scenarios, the Board estimates that the risk balance is downward biased for output and unbiased for inflation. Abroad, one first risk has to do with the behavior of emerging economies, especially China. The latter risk has been present in several Reports already and has recently been exacerbated because of growing doubts posed by the fragility of the Chinese financial system and the overall increase in the risk perception of the emerging world. In particular, adeterioration in the Chinese economy would have first-order effects on Chile and the group of emerging economies, spreading through both real and financial channels. Of particular importance is its impact on the prices of commodities, including copper, as well as on the growth of other important trading partners. Moreover, it cannot be ruled out that the vulnerabilities that some emerging economies have accumulated may generate new episodes of volatility It is also possible for the recovery process in the U.S. to end up being stronger than expected. The timing of its effects shows different signs.
On August 9, 2007, the large French bank BNP Paribas announced that it had suspended activity in three of its funds so it could more precisely assess their value. The problem was stated as follows: “The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating.”  1  I would like to thank my colleagues Meg McConnell, Jamie McAndrews and Brian Peters for numerous useful comments and suggestions on these remarks. BIS Review 81/2010  1  Central banks immediately responded to the evaporation of liquidity in the standard manner. For example, the Federal Reserve issued a statement on August 10 indicating it was providing liquidity for the orderly functioning of markets, and in that statement the Federal Reserve emphasized that “As always, the discount window is available as a source of funding.” One week later it reinforced this statement with a 50 basis point cut in the discount rate and the addition of 30-day term loan to complement the standard overnight discount window loan. At that time, the discount windows of Federal Reserve Banks were only open to depository institutions. Standard monetary economic theory and previous experience were consistent with the notion that depository institutions could act as intermediaries to pass liquidity through to the rest of the financial system. Indeed, in many earlier episodes the mere fact that this backstop liquidity was present had been sufficient to calm financial markets.

What makes our task harder is that the goalposts are moving all the time. Ever increasing complexity  4  BIS Review 52/2006  and interlinkages in the international economic and financial system mean that legislators and standard-setters must run just to try to catch the moving train. In the European context, cross-border integration has progressed further than in other parts of the world, which strengthens financial development and presumably also stability. But integration means increased risks for contagion and we must be vigilant to identify and deal with any vulnerability in the system. Regional FSAP-type assessments are at the same time broad and focused and thus useful for this purpose. In my view, it would be totally wrong to regard the FSAP as a process where the IFIs are the providers, the countries the recipients and the other stakeholders form an interested but passive audience. We need an ongoing dialogue to understand and improve the process. Hence, I am particularly grateful to our Belgian hosts for having arranged this seminar which will give us an opportunity to discuss these important issues. Thus my final conclusion, which answers the question posed in the title of this speech, can be very short: Yes, I strongly believe that regional financial stability assessments in the EU and EEA areas can provide additional values to financial stability and to a better understanding of how the cross-border interlinkages between the financial groups and the infrastructural financial arrangements under certain circumstances may add to the vulnerability of the systems.
As long as private-sector decisions are partly based on expectations about the future, and the central bank through its actions and communication can influence these expectations, the chart illustrates a result that is independent of the explicit economic model: If the central bank can commit itself credibly to a response pattern, it will be able to achieve a better outcome over time than if in each period it attempts to optimise the situation. This is illustrated in the chart in that the line that represents a commitment strategy lies closer to the origo point than the line that represents a discretionary strategy. If, however, economic agents are purely backward looking, there would not be any differences between the two approaches, and the two lines would converge into one. The more forward-looking the economic agents are, the greater the difference between the outcomes is. The way in which monetary policy is implemented and communicated may therefore influence the functioning of the economy through the expectations channel. By committing to a pattern of behaviour, the expectations channel can be used effectively. BIS Review 10/2007  11  Let us now take a closer look at our projections in the previous Inflation Report. The inflation gap closes gradually from below, while the output gap closes from above. According to the Bank’s view, these paths provide a reasonable trade-off between the objective of stabilising inflation at target and stabilising developments in output and employment. Let us now use a time machine and travel forward to 2008.

BIS Review 10/2007  13  In this example, we have been able to reconstruct (approximately) the reference path in Inflation Report 3/06 by minimising a loss function under commitment in a timeless perspective. To reconstruct the reference path, the weight on the output gap in the loss function, lambda, has been set at 0.3. We also had to place a weight on changes in the interest rate in the loss function. This weight, which penalises large changes in the interest rate, can be defended based on considerations regarding robustness and financial stability. What is the outcome if we depart from our established response pattern? 14  BIS Review 10/2007  The chart illustrates what might happen if the central bank reoptimises today, but promise never to do so again. In the model, this will result in a marked rise in interest rates today. But such an approach has been criticised in the literature. If the central bank departs from its response pattern today, it is easy to believe that it will do the same in the future. It may therefore be difficult to gain credibility for such a policy. Even if it may feel tempting, it is important to be aware of the costs associated with departing from an established response pattern. It will then be more demanding to influence private-sector expectations. Frequent reoptimisations will in practice undermine the benefit of commitment and lead to a discretionary policy. The benefit of commitment hinges on the credibility of the central bank’s actions and communication.
The diverging competitiveness is a consequence of various factors and policies as well as of market adjustment mechanisms, which in some cases reflect rigidities in labour markets and the low degree of integration and competition in certain product markets, particularly for services. The persistence of these developments suggests that adjustment mechanisms are functioning slowly and that self-equilibrating forces are not sufficiently strong. The extent and the cumulative effects of differences in competitiveness between some euro area countries raise concerns about their impact on growth. In addition, other factors – some exogenous, such as competitive pressures resulting from globalisation, and some internal, influencing consumer sentiment – affect economic activity and tend to compound the adverse effects of the erosion of competitiveness in some countries or partly offset the benefits from the increased competitiveness attained in other countries. A better understanding of the factors and processes that determine economic fluctuations, inflation persistence and competitiveness developments across the euro area countries will contribute to the diagnosis of the present situation and the assessment of future trends. Two papers in this workshop provide insights and useful results to this end. The extent of synchronisation of economic activity in Europe is examined in the paper by Domenico Giannone and Lucrezia Reichlin, which evaluates long-run tendencies and cyclical fluctuations. Different growth trends may be due to different patterns of specialisation, which can be desirable within the monetary union provided that countries can share risk through capital market integration.

BIS central bankers’ speeches  5  monetary policy to this goal alone, and not to making profits. I would therefore like to thank you, our shareholders, also on behalf of my colleagues, Jean-Pierre Danthine and Fritz Zurbrügg, for your loyal support of and understanding for the activities of the SNB. The Governing Board thanks the SNB staff for their untiring service to our institution. Thank you all for your attention. 6  BIS central bankers’ speeches
Since the start of the crisis, output per hour worked has fallen by around 5%, leaving it more than 15% below where it would have been if it had simply continued growing at its pre-crisis trend rate. As discussed in past Inflation Reports, as well as numerous speeches by MPC members, there are a variety of explanations for this weak productivity performance. These include: specific factors, such as the decline in North Sea oil production and an exaggeration of productivity growth in the financial sector before the crisis; the hoarding of overhead and skilled labour through the downturn; unusually low rates of investment on the back of heightened uncertainty about the outlook; the adoption of more labour-intensive production techniques, encouraged by the high degree of wage moderation; thick-market externalities, which make it easier to find and transact business when demand is strong; and a misallocation of credit as banks repair their balance sheets, with heightened forbearance shown on existing loans to low productivity firms, coupled with caution as regards lending to risky businesses that offer the prospect of higher productivity. Some of these mechanisms depressing productivity can be expected to unwind naturally as demand recovers. But others might take longer and require the restoration of the banking system to full health. And some of the lost productivity growth may prove to be permanent, for instance because of the foregone opportunities for learning by doing.

In that case, unemployment is likely to fall faster as demand grows, meaning that unemployment will reach the 7% threshold sooner. Then it will be appropriate to tighten policy sooner in this case, as potential output will be lower. The only case where the linkage of policy to unemployment is potentially problematic is where there is scope for productivity to increase as demand recovers, but for some reason firms take on extra labour before the increase in productivity takes place. But this seems rather unlikely to me. In any case, it is important to realise that the 7% threshold does not constitute a trigger for the MPC to raise Bank Rate. Rather it represents a prompt for the Committee to undertake a  1  See Bell, D N F and Blanchflower, D G (2013) ‘Underemployment in the UK revisited’, National Institute Economic Review, No. 224. BIS central bankers’ speeches  3  broad assessment of the prospects for demand, supply and inflation. If it appears that there is still a substantial degree of slack in the economy which can be absorbed without threatening the achievement of the 2% inflation target in the medium term, then there will be scope to maintain the existing stance of monetary policy longer, perhaps re-setting the unemployment threshold to a new lower level at the same time.
2/ – the operational framework: most Central Banks conduct monetary policy through changes in interest rates. Many do not pay close attention to monetary aggregates. The Eurosystem stands alone in developing a formal monetary analysis through its “second pillar”. At the very least, however, the crisis has shown that liquidity matters. The assumption of permanent liquidity allowed the shadow banking system to develop and proper. Excessive maturity transformation has fueled the growth in leverage. Liquidity premia were all but eliminated for a long period of time. It is legitimate question whether those evolutions have implications for monetary policy. Recent research tends to show that even small changes in policy rates could have had nonnegligible implications forcing some intermediaries to close leveraged positions and, potentially, to partially correct some financial imbalances. Those issues may still be relevant today when in face of uncertainty, liquidity provision remains important. This is why, even for monetary policy purposes, Central Banks should keep actively monitoring asset prices, credit flows and liquidity conditions. 3/ – a closely related question pertains to the transmission mechanism. Evidence tends to show that risk appetite tends to increase when interest rates stay low and liquidity is perceived as abundant. This is called the “risk taking channel” of monetary policy. Risk taking behaviors are amplified when monetary policy is permissive. Ultimately, this channel creates a link between the levels of interest rates and risk premia.

BIS Review 76/2010  5
Second, the crisis revealed severe shortcomings in banking regulation. Banking and financial sector regulation is now being reformed in many countries. Norwegian banks have become more solid in recent years. This is a positive development. Banks’ capital, in particular that of the largest banks, should be increased further in order to satisfy the new regulations. 6  BIS central bankers’ speeches  The forthcoming regulatory framework for banks in the EEA includes a countercyclical buffer – a capital requirement that can be increased in upturns and turned off in downturns. When banks are required to build up an additional buffer, they are better equipped to cope with periods of rising losses. The buffer will strengthen the resilience of the banking sector during an upturn. It may also counteract the build-up of financial imbalances, although the effect is uncertain. Thus, Norges Bank cannot disregard taking financial imbalances into consideration when setting the key policy rate. The criteria for the conduct of monetary policy remain firm, also after the introduction of a countercyclical capital buffer. Later this year, Norges Bank will provide advice to The Ministry of Finance on the size of the countercyclical buffer. An integrated analysis and set of forecasts form a common basis, both for this advice, and for the Bank’s monetary policy decisions. The Norwegian economy is also vulnerable Structural adjustment in the business sector is the key to economic progress. Over the past 40 years, the oil and gas industry has been an engine of innovation and growth in Norway.

We have invested in a profitable oil industry and found a balance between spending petroleum revenues domestically and saving petroleum revenues. On the other hand, it seems that both the public and private sectors are having difficulties finding profitable mainland investment projects. Taking a longer view, this is a source of concern. Should petroleum revenues shrink, our economy needs more pillars to stand on. Otherwise, we as well would have to embark on a path of adjustment towards renewed growth. Perhaps Norway is not so much an economy apart after all. Thank you for your attention. BIS central bankers’ speeches  13
As for the PSPP, Greek government bonds lost their eligibility on 21 August when the programme ended. At that point, the Eurogroup’s debt measures had still not been ratified. In any case, purchases would have been very limited over such a short period. Is there any chance that Greek bonds could be included at some point in the future in the reinvestment phase of the PSPP? How many years do you think the reinvestment of maturing securities will last? Without a programme, Greek government bonds are now treated like any other bonds for the purpose of ECB eligibility. Once they regain investment grade status they could be included in all ECB programmes, subject to a Governing Council decision. As you know, we intend to reinvest the principal payments from maturing securities purchased under the asset purchase programme (APP) for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. The government seems to have put on hold, for the time being, plans to return to the markets. Do you think that Greece has now regained full access to international capital markets? Do you think it should wait until after the elections to go back to the markets? Greece’s market access conditions have clearly improved compared with one year ago.

Panicos Demetriades: The pros and cons of having a separate and independently managed asset management and development bank Welcome remarks by Mr Panicos Demetriades, Governor of the Central Bank of Cyprus, at the Institute of Directors (IoD) Open Panel Discussion, Nicosia, 27 August 2013. *  *  *  Good evening ladies and gentlemen. I think tonight’s panel discussion is very important. The Bank of Cyprus is our largest bank and it will shortly hold its Annual General Meeting. At the AGM shareholders will choose the Board that will run the bank. The strategy that the new Board approves will need to be aggressively pursued. The Bank of Cyprus in the future will have a greater focus on its core Cypriot business, serving personal, SME and corporate customers. It will also have to deal with the legacy of historic expansion and growth in non-performing loans. The Central Bank of Cyprus does not have a fixed view as to whether the Bank of Cyprus should be split into two or not. This is a decision for shareholders and the Board. The question is whether separating certain assets is the right answer today. Opinion is divided – some say that this would be damaging to borrowers, others that it is the only way to manage the assets and restore the bank to health. I believe that we need to confront this issue and the bank should investigate all options. Any decision should be based on the facts and merits.