samchain/econo-pairs-v1 huggingface dataset:
Growth was also improving abroad, which increased the demand for our exports (Chart 16). In this chart, each business cycle is contrasted with real exports normalized to a value of one at the business cycle peak, which is dated as time zero on the chart. The chart shows the relative path of real exports during the contraction and recovery for each cycle. The recovery in exports for this cycle was quicker than for the prior recession in 2001. Firms reacted to the significant challenges presented by the recession by focusing on cost cutting and improved efficiencies. These efforts led to a rise in measured labor productivity (Chart 17). With labor compensation growth declining due to the weakness in the labor market, the higher labor productivity resulted in sharp declines in the costs of producing goods – unit labor costs. The decline in unit labor costs helped firms to restore their profitability. As demand conditions improved, firms on net began to increase their employment and hours worked by their staff (Chart 18). It is important to note that improvement in the demand for workers will not necessarily lead to a steady decline in the aggregate unemployment rate. During the recession, many unemployed workers withdrew from the labor force and stopped  2  BIS central bankers’ speeches  actively looking for employment. This can be seen by the decline in the labor force participation rate (Chart 19).

In this regard, the reform in late 2022 of the Code of Good Banking Practice (CGP) focuses precisely on orderly debt restructuring for household segments with a high degree of socio-economic vulnerability. The Banco de España will assess its implementation as more data become available. How different banks and financial systems position themselves against these risks will determine how resilient they are. In this regard, amid such high uncertainty, including that surrounding the degree of monetary policy tightening, Spanish banks must implement a prudent provisioning and capital policy. A policy that earmarks part of the short-term increase in earnings to bolster the sector’s resilience would thus put it in a better position to absorb any potential losses should the worst risk scenarios materialise. From a European standpoint, it should also be noted that a smoother-functioning euro area with improved governance would contribute hugely to making the European financial system less vulnerable. In particular, the creation of a fully mutualised European deposit insurance scheme would boost the confidence of citizens and the markets and contribute to increased risk-sharing in the euro area and, thus, to reducing potential episodes of fragmentation. 9  The values within this range are obtained based on different assumptions regarding the percentage of debt that matures in the short term and is refinanced. The 6.8 pp impact at the upper end of the range assumes the full renewal of the debts maturing in the short term.
We knew the nascent recovery was not yet secure. So we used the flexibility in our remit, given to us by Parliament, to return inflation to the target over a longer period than usual in order to support sustainable jobs and growth. To make our intentions clear, the Bank committed not to even think about raising interest rates from historic lows at least until unemployment fell back to 7%. That guidance gave businesses the confidence to hire and invest. It reassured households that the costs of servicing their debts were not about to rise abruptly at a time when they remained particularly sensitive to interest rates. And it evolved with the economy. The effectiveness of that policy has been reinforced by the healing of the financial sector. Prompted by the Bank of England, British banks have raised over £ billion in new capital in the past few years. They are right-sizing their balance sheets and re-focussing their businesses. The recovery has exceeded all expectations. It has momentum. There has been a sustained and sharp fall in the unemployment rate to 6.4%. Over 800,000 jobs have been created in the past year alone. We expect robust growth of 3½% this year and 3% in 2015. The challenge now is to secure a durable expansion; to make sure the economy realises its full potential. What does that mean for interest rates? With many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer.

With inflation at 1.6%, continuing downward pressure from the appreciation of sterling, and with slack remaining, the current inflation environment is benign. But it will not remain benign if we do not increase interest rates prudently as the expansion progresses. Our latest forecasts show that, if interest rates were to follow the path expected by markets – that is, beginning to increase by the spring and thereafter rising very gradually – inflation would settle at around 2% by the end of the forecast and a further 1.2 million jobs would have been created. In other words, we would achieve our mandate. There is, as always, uncertainty about the future. But uncertainty does not mean stasis. You can expect interest rates to begin to increase. The exact path will depend on the economy. Our assessment will undoubtedly change as the economy evolves and policy will of course be adjusted if geopolitical events have a material impact on the outlook. If indicators suggest the economy is moving more slowly towards our goals, we will have learned that we are further from sustainable capacity. Prospective wage and unit labour cost growth will be weaker. Rates will go up later and more gradually. And should we see faster progress, prospective wage and unit labour cost growth will be stronger, which will suggest we are closer to maximum capacity and that the economy can sustain higher rates sooner. In all events, rate rises can be expected to be gradual and limited compared to the experience of the UK in the past.
The low outcomes have surprised not only the Riksbank, but also many other analysts. But despite inflation and wage increases being lower than expected, resource utilisation – measured as a shortage of labour – has not been unusually low. It has on average been at around the same levels as prior to the financial crisis, see Figure 3c. Monetary policy has in turn been expansionary, with a policy rate that has on average been just over 2.5 percentage points lower after the financial crisis than before it, see Figure 3d. In addition, there have been large purchases of government bonds to make monetary policy even more expansionary. 9 See Kjellberg (2018). 6 [24]  Figure 3. Inflation, nominal wages, labour shortages and the policy rate in Sweden, before and after the financial crisis (a) CPIF (b) Nominal wages 4  4 5  3  3  2  2  1  1  0  0  -1  03  06  09  12  4  4  3  3  2  2 Average 2000-2007 and 2010-2018  Average 2000-2007 and 2010-2018 00  5  15  (c) Labour shortages  18  -1 1  00  03  06  09  12  15  18  1  (d) Policy rate  Note. (a) Annual percentage change, (b) annual percentage change, wages according to short-term wage statistics (c) per cent, (d) per cent.

Against this background, this calls into question whether the surveillance mechanisms available at the moment and the role played by emerging markets in international cooperation are adequate in ensuring international financial stability, the essence of the mission of IFIs. It is therefore in times of crisis that the value of the international cooperation be measured and the voice and representation of emerging markets be heard IFIs. The unprecedented events of the past months present a historic opportunity for the international bodies to rise to the challenge. The time has come for them to be more proactive and become truly global institutions. Apart from strengthening the roles of IFIs, I believe that regional cooperation can play an important role in supplementing both national and global responses. I’d like to raise two observations on this issue. First, the global financial crisis highlights the need to put in place an effective regional surveillance mechanism that can detect weakness early on. International financial institutions will remain useful for global surveillance and financing balance of payments need when necessary. However, waiting for the global community  2  BIS Review 163/2008  through international financial institutions for regional surveillance may be too little too late for timely policy measures that can safeguard the region from contagion from other parts of the world. Indeed, it is very important for policymakers with common challenges to put greater efforts in having a clear and in depth understanding of one another’s policy and practices.
In general, our efforts resulted effective in managing the liquidity problems, however tighter funding conditions faced the Albanian economy in both public and private sectors. This tendency reflects, to a great extent, the risk aversion in financial agents and markets. Addressing it will be our main challenge over the next year. Back to economic development. Official data show that the economic growth for 2012 remained positive but slower than in the previous year. According to INSTAT data, gross domestic product grew by 1.6% in 2012, supported by boosted activity in services and agriculture sectors. Meanwhile, the industrial sector remained stagnant, while the construction sector shrank, reflecting the weak domestic demand and specific sector-related problems. Though to a lesser extent, the economic growth was supported mainly by external demand and increased exports. On the other hand, despite the stimulating monetary policy, the domestic demand appeared weak. This weakness reflects the reluctance of consumer and businesses to consume and invest, and the limited space for increasing public spending. In general, the Bank of Albania deems that these determinants of economic growth will continue to be present even over the next quarters. The low degree of existing capacity utilization affected the labour market. The pace of increase in employment slowed down, though the unemployment rate has remained 13.3% over more than one year. Rising exports and slowing imports brought about 13.8% decline in current account deficit.

Increased public discontent being actively exploited by populists is mainly linked to the nondynamic development of the global economy over this decade. The reasons are different: ageing of the population and the reduction of the economically active population; low growth rates in countries used to be the powerful drivers of growth in previous years, such as China; the lack of new breakthrough technologies; accumulation of  BIS central bankers’ speeches  1  various structural imbalances; the on-going reduction of debt burden accumulated before the 2008 crisis (so-called deleveraging) and so on. The problem is that low growth rates affect the poor more adversely than the rich. Income disparity in the world has soared since the mid-1980s. The latest OECD report emphasises this fact. The Gini coefficient in OECD countries grew by almost 10% to 32. According to World Bank estimates, in 2000–2012 the Gini coefficient in Russia increased from 37 to 41.5. It would not be an exaggeration to say that a vicious circle is being shaped: low rates of economic growth strengthen centrifugal and disintegration forces and provoke events like Brexit, which downgrade the outlook for world economic growth even stronger. A growing demand for ‘easy’ economic decisions has also been observed in Russia. For example, giving promises that the printing of 1–2-3 trillion rubles and their issue as cheap loans will ensure sustained acceleration in economic growth rates without serious inflation implications. This is even based on pseudo-scientific foundation.
Øystein Olsen: Economic perspectives Speech by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Norges Bank, Oslo, 3 April 2014. *  *  *  The speech is based on the annual address 2014, Monetary Policy Report 1/14 and previous speeches. Please note that the text below may differ slightly from the actual presentation. Accompanying charts can be found at the end of the speech and on the Norges Bank website. Excellencies, Ladies and Gentlemen, First of all, I would like to welcome you once again to Norges Bank. This year is the bicentenary of the signing of the Constitution of Norway. Two hundred years ago, Norway was a poor country on the periphery of a Europe that was then the world’s economic centre of gravity. For the 112 sworn representatives, popularly known as the men of Eidsvoll, who took their places as the Constituent Assembly in spring 1814, the atmosphere was full of hope for freedom and a better future. Several of them had spent time abroad and had been influenced by philosophers and by the American and French revolutions. The Norwegian Constitution was inspired by the ideas they brought home. Absolute monarchy under the Danish king was to be replaced by the sovereignty of the people and the separation of powers. Institutions with clearly distinguished roles would prevent the arbitrary use of power and foster confidence.

A much more important issue with respect to policy normalization is moderating the risk of a sharp snapback in longer-term yields. But this has less to do with the size of the balance sheet specifically than the challenge of normalizing the current stance of monetary policy in all its dimensions. There is always a risk that market participants will foreshorten the Fed’s actions. Market participants could collapse an extended sequence of steps back to the date of the first move towards normalization resulting in an abrupt tightening of financial conditions. The move to economic thresholds-based guidance for the fed funds rate should help in this regard. While the thresholds are certainly not triggers, they should help market participants adjust expectations about the likely timing of liftoff in a relatively continuous manner and guard against these expectations being pulled further forward in time than is warranted by changes in the economic outlook. Nevertheless, we will need to communicate our broader intentions very clearly. Even when purchases cease, the enlarged balance sheet will provide substantial ongoing stimulus. It is important to recognize that the Fed could remain in this posture with policy “on hold” for a significant period. As the threshold framework should make clear, there is no fixed timeframe between completing purchases and raising short term rates. Long-term yields rose sharply in 1994 and 2004 when economic recoveries got underway in earnest after sustained periods of unusually low short-term rates.
The surveillance framework of today has a number of features that make it poorly suited to a small open emerging market economy that has fragile credibility, a limited buffer against shocks, and considerable exposure to a rapidly changing economic and financial environment. The assessments occur quite infrequently, only every 12 to 24 months. The assessments can only be published with the approval of the member state, which tends to take the edge off the diagnoses and prescriptions. Assessments do not come with a clear evaluation relative to thresholds that help define degrees of vulnerability, or relative to other countries in similar circumstances. The assessments are judgments of the Fund’s Executive Board, not formally of the staff, which can also work to take the edge off candid economic and financial judgments. Risks are not clearly and candidly identified and explored. And the process does not come with consequences, since critical evaluation can be withheld from the public, and neither favorable nor critical evaluations necessarily have consequences for access to financial assistance from the Fund. The model we use for bank supervision in the United States offers an interesting contrast. We undertake a continuous process of onsite examination. We use a risk-based framework for focussing attention on critical factors. We produce a confidential rating of select dimensions of the financial profile of the institutions and their risk management and control infrastructure.

•  With these improvements, and generally accommodative external financial conditions, borrowing costs have fallen, capital market access was restored for many countries, and credit growth resumed. Net credit growth to sovereigns has remained moderate, however, as much of the borrowing has gone to refinancing the existing stock of debt on more favorable terms. •  The market for emerging market debt also has matured. There has been more differentiation in the response of spreads, both on the way down as credit fundamentals seemed to improve, and during the recent correction. This progress is indicative of a general increase in the sophistication and skill of economic policy makers in the emerging world, and in the quality of understanding of the benefits of macroeconomic stability and how to achieve it. Many countries benefited from the advice and financial support from the IMF and the multilateral development banks. But the most successful were those with policy makers who were ahead of the Fund and the Bank in diagnosing and addressing their problems, rather than being dragged reluctantly toward a more credible policy stance. These improvements have left the emerging markets as a group less vulnerable to financial crisis than they were in the mid-1990s. The combination of deeper reserve cushions, stronger external positions, improved balance sheets, more flexible exchange rate regimes, and better inflation performance provide a very different setting from what existed the last time we faced a transition after a sustained period of benign financial conditions and low interest rates.
Liquidity insurance facilities that underpin banks' funding are obviously helpful to that, as they increase the probability of bank-dealers being able to finance unwanted inventory. But some voices have argued that the authorities should act more directly to preserve market liquidity; or, in other words, that central banks should stand ready to act as a Market Maker of Last Resort. 23 Certainly, the profound changes in the structure of the financial system over recent decades should not leave us blindly attached to mid-19 century precepts. But nor can we be blind to the challenges in embarking on acting as MMLR. In the first place, whereas lending to a bank does with certainty give that bank more liquidity, entering a market as a buyer does not automatically enhance the liquidity of that market. Secondly, whereas central banks can protect themselves against the risk in secured loans by requiring more collateral if conditions deteriorate, an outright purchase is a one-off transaction; if we pay too much given the true risk, that’s that. cushion, a bank should hold a core of the most reliably liquid assets, such as cash and high quality government bonds or similar instruments, to guard against the most sever stress scenarios”. 23  For example see, Buiter W and Sibert A (2007), “The Central Bank as Market Maker of Last Resort”, Maverecon – Willem Buiter’s Blog (http://maverecon.blogspot.com/2007/08/central-bank-as-market-maker-oflast.html). This section has benefited from internal discussions with Kalin Nikolov and Roger Clews. 10  BIS Review 67/2009  So this is new territory.

It is the most significant step since towards a united Europe and is exactly in the spirit of how the founding fathers of Europe wanted the EU to evolve since the introduction of the euro. The role of the Governor of the BdF like that of the President of the Bundesbank will increasingly be that of an important player on the European field, and much less at the national level. In Germany, we tend to believe that the role of national central banks is shrinking. C.N. At the Banque de France, some of my colleagues thought that one day the ECB could replace us. I told them that it would not happen as we are in a federal system with a relatively small centre. Within the Governing Council we take common decisions but most of the work is done by the national central banks. But from now on we will have to work differently, for example, instead of looking for the best payment system for France, we must look for the best payment system for the euro area as a whole. In this respect, our best partner has mostly been the Bundesbank. But the relationship seems to have become more distant? BIS central bankers’ speeches  3  C.N. No, certainly not. The Bundesbank remains our number one partner. We may start with different approaches on some of the issues in the Governing Council but in the vast majority of cases we have the same responses.
And while, in this country particularly, we are having to work harder to keep her from tasting Father Bear’s porridge, there are now signs that the porridge itself may be beginning to cool down - as it needs to do, quite soon and quite quickly, if we are not to see inflation pick up. Some US business people - and certainly some British business people - engaged in international trade are understandably discomforted by the recent strength of our respective exchange rates - not vis-à-vis each other because the dollar-sterling rate has been relatively stable, but against the rest of the world. But the domestic environment, here and in the United States, remains - actually and prospectively - relatively benign. We are though both exposed to the chilly winds now blowing from Asia. And I should like to devote the rest of my remarks to discussing the problems in Asia and considering just how serious a threat they pose to the global economy. I emphasise “problems” in this context because it is important to recognise that the situation in Asia differs materially from one country to another, even though they are all inevitably affected to varying degrees - through their close commercial links with each other by the present economic weakness in the region as a whole. Let me begin with a few words on Japan. Japan is of course much the largest economy in Asia.

Note that, in both cases, aggregate consumption is slightly higher once the infection risk has gone because, having been saving more, the consumer has greater net wealth by that point. Chart 5b: Sharper response when infection rates  Chart 5c: Response smaller when there are  less persistent  close substitutes for risky spending  Finally, Chart 5(c) demonstrates what happens to aggregate spending when the two categories of spending are assumed to be closer substitutes3. Both lines use the shorter-lived spike in infection rates (the red line in 3  The degree of substitutability between two goods corresponds to the sensitivity of their relative demand to a change in their relative price (i.e. the slope of the demand curve). Chart 5(b) and the red line in Chart 5(c) assume that, in normal circumstances, a 1% rise in its relative price would reduce demand for the risky good by 1½%. The grey line in Chart 5(c) doubles this assumed response to -3%. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  5(a)). When it’s easier to find a reasonable substitute for the risky spending then, unsurprisingly, that’s what the consumer does. The drop in aggregate spending is also smaller in this case. How do these points square against the real-world experience? It’s hard to test them definitively, with less than a year’s experience to go on. It’s also quite possible that some of these parameters have changed through time.