samchain/econo-pairs-v1 huggingface dataset:
It has been a long time since the trough of the Great Recession. In the wake of the recession, the unemployment rate reached at an astonishing peak of 10.0 percent. Since then, we have made significant progress in moving the unemployment rate back to a more normal number. Yet, at 6.1 percent, it remains too high. And, as I will discuss shortly, some other measures suggest that the labor market is far from complete recovery. We have underperformed on the inflation front as well. Since 2008, year-over-year total inflation as measured by the Personal Consumption Expenditures Price Index (PCE) has averaged just 1.4 percent, well below its 2 percent target. Today, PCE inflation stands at 1-1/2 percent and is expected to move up only slowly toward the FOMC’s target. Nonetheless, we have come a long way in healing the injuries the financial crisis inflicted. Certainly monetary policy has been doing some heavy lifting. The Federal Reserve responded quickly to the unfolding recession by cutting the fed funds rate to near zero by December 2008. Once at the zero lower bound, we then turned to unconventional measures, such as large-scale asset purchases and forward guidance about the federal funds rate, to provide further accommodation. In the fall of 2012, with the unemployment rate hovering stubbornly at around 8 percent and core inflation steadily drifting lower than our 2 percent target, the Fed introduced open-ended asset purchases and, later, forward guidance that related federal funds rate actions to thresholds explicitly expressed in terms of our policy goals.

Also the existence of a deep and liquid financial market that offers a breadth of financial instruments and improves the ability of the economy to absorb shocks is generally lacking. Indeed, a number of empirical studies indicate that financial development, especially greater financial access, is associated with lower macroeconomic volatility. The institutional framework of monetary and financial supervision policy also has an important influence on the extent to which various shocks make their way through the economy. For example, a lack of independence and credibility in monetary policy to anchor long-run inflation expectation is likely to undermine macroeconomic outcomes. In contrast, a credible policy framework and central bank independence provide the necessary preconditions for alleviating the impact of shocks on the economy. Similarly, weak supervisory framework also increases risks to financial imbalance build-up. BIS Review 89/2007  3  Overall, our proposition is that the unique combination of shocks and structural features of the economic system in emerging market give rise to a macroeconomic backdrop that is characterized by significantly higher output and consumption volatility than in developed economies. The Asian financial crisis ten years ago is a good example of this interaction, where large and persistent capital flows interacted with financial system underdevelopment and rigid policy regime resulting in a boom-bust cycle. Against this backdrop, the pursuit of monetary and financial stability in emerging market, therefore, has two key facets.
Government assets and liabilities Estimates In billions of NOK Assets  Liabilities  Petroleum Fund Norwegian National Insurance Fund  390  Direct ownership  300  Minor holdings  100  Bonds and Treasury bills  170  50  State banks’ lending 165 Right to tax  Commitments of the welfare state  The previous table showing government assets and liabilities does not, however, provide a complete picture of the government’s financial position. The right to tax corporate and personal income and wealth and to levy indirect taxes is clearly the government’s most important asset. General government tax revenues are estimated at close to NOK630 billion this year. The expected real return on government net financial wealth is about a sixteenth of this. In 2005, when the value of the Government Petroleum Fund could reach NOK1200 billion, the total return on government financial assets will approach one tenth of general government revenues at the current tax level. At the same time, future expenditure on pensions, health, education, infrastructure and the judicial system represents a major commitment for the government. Government expenditure for maintaining and developing the welfare state will increase substantially in the years ahead, primarily as a result of demographic trends. Estimates show that government expenditure on old-age pensions and disability benefits will double from 7½ per cent of GDP in 2001 to 15 per cent of GDP in 30 years.

Consumption and private sector investments were weak, whereas foreign demand continued to slow down, given the economic situation in our trading partner countries. The private agents’ uncertainty about the future was reflected in low propensity to spend and weak credit demand. This uncertainty prevented the transmission of the monetary stimulus to the economy. Moreover, banking system conservative policies maintained the lending standards tight, and prevented the normal functioning of the monetary policy transmission mechanism. Against this backdrop, economic and financial stability of the country was preserved. Private agents’ expectations on inflation were anchored around Bank of Albania’s target, showing a good perception of monetary policy signals, and effective communication of the Bank of Albania. The banking system remains sound and well capitalised with ample liquidity to ensure the return of financial intermediation to adequate levels, in spite of credit qualityrelated problems. Average annual inflation continued the decelerating trend in the third quarter, settling at 1.5%. The profile of inflation was determined almost entirely by the contribution of inflation from prices of agricultural products. Beyond the seasonal effect related to satisfying demand with domestic agricultural produce, these prices fell thanks to the drop in import prices for processed foodstuff in the countries of origin. Prices of other consumer goods categories provided low contribution to headline inflation, hence offsetting each other. Low inflation rates, especially in the long-term component, point to the presence of the negative output gap.
When inflationary pressures are looming or building up, the Central Bank raises its policy rate in order to make credit more expensive and reduce investment and consumption, encouraging saving at the same time. The policy rate is not applied to achieve other objectives than the inflation target. Thus it is pointless to set other objectives for monetary policy except by abandoning the objective of price stability, which would be particularly imprudent. Steady enhancements have been made to the conduct of monetary policy. Forecasting has strengthened with a new and much more powerful macroeconomic model. A landmark was reached this year when the Bank began publishing its staff’s projection for the policy rate path that is compatible with attaining the inflation target within an acceptable timeframe. Previous interest rate assumptions had proved unsatisfactory and even misleading. Publication of the policy rate path has been welcomed and has facilitated the Central Bank in exerting the impact that it intends to have on market expectations. International agencies and foreign analysts who monitor economic developments in Iceland have praised the Central Bank’s monetary policy implementation, transparency and professionalism. It is interesting to note that these assessments are at odds with widespread attitudes in Iceland at the moment. In the climate that has prevailed recently, the Central Bank’s policy rate hikes have admittedly affected the exchange rate of the króna first, then demand much later. Among the explanations is that policy rate hikes have not had what should have been their normal effect.

Failing to support monetary policy in efforts to achieve the intended results would be an act of surrender and have dire consequences. 6  BIS Review 111/2007
Lorenzo Bini Smaghi: From boom to bust – towards a new equilibrium in bank credit Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Ernst & Young Business School seminar, Milan, 29 January 2010. *  *  *  I would like to thank, in particular, L. Cappiello, P. Aberg, G. Wolswijk and D. Marqués Ibañez for their contribution to the drafting of this speech. The opinions expressed are solely my own. 1. Introduction  There is now a broad consensus that the period leading up to the crisis was characterised by excessive credit growth. When the bubble burst, it resulted in the most pernicious banking crisis since the Second World War, accompanied by a severe economic recession. In order to revert to a more balanced and sustainable management of credit, while safeguarding the role that credit plays in stimulating growth, new rules, regulations and incentives for financial market participants are needed. This is what the regulatory authorities and governments of all major industrial countries and developing countries are working towards. This is not the end of the issue, however. Once the objective of establishing a new “steady state” has been identified, the path towards achieving this objective must be carved out. This will not be easy. If the adjustment is too swift, it could result in an over-adjustment of credit flows, i.e. be too restrictive, giving rise to recessionary effects on the real economy.

Over the last few months, leverage has generally fallen, especially among those institutions that were most highly leveraged. 20 The fall reflects, in part, recapitalisation efforts, lower risktaking as a result of more prudent lending standards, and the shedding of assets and/or limitation of the growth in balance sheets. It also reflects pressure from the market and supervisory authorities to control leverage, as well as expectations regarding the possible introduction of a leverage ratio, in addition to risk-based capital requirements. 21, 22 Likewise, capital position ratios of large and complex banking groups in the euro area are improving. The earnings of these banks have recovered, while the growth of total assets and of risk-weighted assets has slowed down and capital has increased, both from public and private sources. These developments were necessary in view of the expected increase in non-performing loans as a delayed result of the economic crisis. 18  W. Bagehot, “Lombard Street: a description of the money market”, Scribner, Armstrong & Co., 1873. 19  With regard to the importance of an accommodative monetary stance at the margin, see, for instance, T. Adrian and H.S. Shin, “Financial intermediaries and monetary economics”, Handbook of Monetary Economics, forthcoming. 20  It should be noted that this effect only arises when the impact of losses on the capital base is greater than the reduction in the value of marked-to-market assets on the balance sheet.
I will then discuss the risks and challenges facing the Thai economy, especially those relating to volatile international capital movements and their impact on the Thai baht in the short term and in building resiliency and enhancing productivity for the longterm. Ladies and Gentlemen, Let me start with the global picture. For a number of years now, we have witnessed strong global growth driven mainly by growth in the US economy and in emerging markets, particularly non-Japan Asia. During this same period, we have also seen growing global imbalances with the rest of the world financing the US’s growing current account deficits. There is yet no consensus on how this global financial imbalance will unwind, but everyone expects that a large dollar correction will be part of the unwinding process, which will impact on financial markets and exchange rates worldwide. My view is that we are likely to see more market jitters along the unwinding process of this global imbalance. Indeed, for the last couple years, we have already experienced large magnitude of capital fluctuations and exchange rate volatilities. This year alone, we have observed two episodes, in February and again in August, of the shift toward greater risk aversions, with sharp falls in the stock markets across the world, from New York to Shanghai, and Bangkok included. At this juncture, there seems to be an increasing disconnect between global growth and financial stability.

To meet these challenges from without, it is critical that the Thai economy build strength from within: by continuously improving the flexibility and efficiency of its firms, the resiliency of its households, and the competitiveness of its business environment. But beyond getting the fundamentals right and strengthening them, the Thai economy needs a strategic policy package that builds a system that allows for constant self-correction – one that also let the economy regain its strength quickly after a severe negative shock. That system should be underpinned by a strong link to the world economy, which will encourage innovation and efficiency. Specifically, I should underscore that this approach requires policy markers to focus on achieving three key objectives, namely managing volatilities especially those emanating from volatile global capital movements; building resiliency in both real and financial sectors; and fostering long-term productivity improvement. Looking ahead, the pressing and practical challenges we face in the near term are three-fold and indeed they are also inter-related. They are “hot money” inflows and large inflows in general, pressure for rapid domestic currency appreciation, and finally, the potential loss of monetary autonomy in the sense of independent interest rate policy. Being part of the fast growing Asia, Thailand and its neighbors have become attractive destinations for international investors – although the more powerful underlying reason may ironically be a medium-term flight from US dollar assets since 2002. With large capital inflow comes pressure for these currencies to appreciate. In this experience, some currencies appreciate faster than others.
While ULC went up sharply before the crisis for unproductive firms, highly productive firms did not experience significant ULC growth.17 This implies, first, that there is substantial potential to boost productivity by reallocating resources both across sectors and within sectors towards the most productive firms; and second, that reallocation is not dependent on further ULC adjustment among those firms, as the most productive firms did not experience a significant competitiveness loss. In other words, productivity gains can be realised in the short- to medium-term independent of necessary longer term processes such as improving innovation or adopting new technology – or indeed, completing internal devaluation. Achieving these gains in the euro area today requires reforms that address both price signals and credit allocation that hinder the pace of reallocation. In terms of price signals, I have discussed how before the crisis excessive rents in sheltered sectors distorted profit signals and encouraged capital misallocation. Hence, ensuring that capital now flows towards higher TFP firms must involve deepening the single market and strengthening competitive forces in the non-tradable/services sector. Greater competition will also support TFP growth through various static and dynamic channels: a recent empirical  16  For an explanation of this phenomenon in the US context see Bernanke, B (2005), “Productivity”, remarks at the C. Peter McColough Roundtable Series on International Economics, January 2005. 17  Di Mauro, F. (2014), “Firm-level data: Who said that they are too difficult to use for policy?”, VoxEU 11 March 2014.

The core issues from the United States perspective have been whether agreement can be obtained on rules that are open to all systems, that is rules that recognize leading technologies such as Public Key Infrastructure, or PKI, but also provide legal support for other systems. Moreover, variable PKI formats have been developed, and differing levels of PKI certification will be in commercial use, including CA generated high and low level certs, and probably non-CA issued certs. The United States position has been that the different user paradigms may require different legal standards and presumptions, which should not be limited to existing PKI-based systems. In addition, the United States has advocated that any UN or other international legal text on signature rules should incorporate both regulated licensed systems and private sector non-regulated systems. Furthermore, such rules should be open to non-digital technologies. From the standpoint of BIS Review 26/1998  -9commercial law, delineation of fall-back rules on obligations, assurances, and reliance would be necessary to achieve the necessary risk allocation and commercial usage. This will probably require sliding standards for attribution, commercial reliance, liability and security depending on the types of transactions and the imperatives of market cost and pricing. Carveouts may be appropriate for closed or controlled access systems. So far, there has been a significant amount of debate, but little agreement, on these and a host of other issues.
As part of the agreement between the HKMA and Standard Chartered Bank, the latter  BIS Review 41/2002  1  will in turn appoint Hong Kong Interbank Clearing Ltd, the current operator of the Hong Kong dollar and US dollar payment systems, to develop and operate the euro system. The role of the HKMA will be to oversee the design and implementation, and to ensure that the system meets the highest international standards. And so, Hong Kong will shortly have a pioneering facility for the efficient and secure conduct of euro transactions in Asian time, as a further significant piece of our financial infrastructure. The benefits to both local business and international customers, in both trade and finance, should be considerable. I take this opportunity to thank and congratulate those who have worked hard to bring the project to its present advanced stage in so short a time, and especially to thank Standard Chartered Bank for the enthusiasm and professionalism which they have brought to the exercise. I wish every success to all who will be involved in translating the design into reality. 2  BIS Review 41/2002

This certainly will bring new challenges for the BNB and commercial banks to deal with, as this will require changes to their timetables and the relevant calibration of the resources earmarked for this purpose. Let me sum up in conclusion. The current issues relating to inflation and the legislative programme must be considered in the wider context of the needed political and fiscal consolidation. Otherwise the measures in these spheres will remain sporadic and ineffective. The BNB and commercial banks have been systematically and consistently working on the issues within their competence concerning the euro adoption, but they are prepared to calibrate the tasks and the resources for their performance should the target date be changed. 4/4  BIS - Central bankers' speeches
It refers to a ball which pitches in such a position – the corridor – that the batter does not know whether to be playing off the back foot or the front foot. This, I will argue, is similar to the dilemma facing monetary policymakers on the Bank’s Monetary Policy Committee (MPC) today. Should monetary policy hold back until key sources of uncertainty about the economy have been resolved? Or instead push forward to prevent leaving it too late? Playing off the back foot Let’s start with where we have been. Since 2007, the UK and global economy has faced a barrage of financial bouncers of frightening pace and ferocity. The economy was on the back foot for much of this period. Output growth in the UK fell short of the Bank’s, and other mainstream forecasters’, expectations between 2008 and 2012. By the end of 2012, output in the economy was still 3% below its 2007 level. This was indeed a Great Recession. With the economy falling well short of expectations, monetary policy was required to shore up its defences, to prevent recession morphing into depression. That meant interest rates falling to unprecedentedly low levels, in the UK and globally – indeed, the lowest levels in the Bank of England’s 320-year history. This monetary medicine was then augmented with £ billion of asset purchases by the Bank from 2009 onwards, known colloquially as Quantitative Easing or QE. It is impossible to know for sure how the economy would have performed without this extraordinary monetary medicine.

Even for the natural sciences, dealing with physical constants and fixed laws of motion, the voyage of discovery can sometimes be a lengthy one. It took a century before estimates of the speed of light had converged to its true value. For much of this period, not only were best-estimates biased but the estimated confidence intervals around them often did not encompass the true value.6 Modelling complex, adaptive, socio-economic systems would make these estimation problems pale by significance. It is for these reasons that the Bank is also investing in its research capacity. For example, in our quarterly Inflation Report the Bank now shows alternative scenarios for inflation and output under different assumptions about how the world works. Alongside this, the Bank is putting greater effort into developing a pluralist set of approaches to model-building, drawing on other disciplines. Operating in the corridor In time, these investments in data and research will narrow the corridor of uncertainty. But for now, the key public policy question is what to do when operating in it? Rocket-scientists, of the real rather than metaphorical kind, have a clear answer to this question: avoid really bad outcomes.7 This is sometimes called a “minimax” strategy – the aim being to minimise the chances of the maximum possible loss. It is the policymakers’ equivalent of the Hippocratic oath – “do no harm”. So what, then, are these avoidable-at-all-cost scenarios? Let me consider three from a potentially long list.