samchain/econo-pairs-v1 huggingface dataset:
Recent barriers include new measures to prevent foreign investment in national infrastructure. At the same time, the WTO’s position has weakened, making it more difficult both to resolve disagreements and carry out needed regulatory reforms. 4  Last year was marked by trade tensions between the United States and China. The United States raised tariffs on a range of imports, and China retaliated in kind. The immediate effects of increased tariffs are higher selling prices on goods liable to tariffs, adversely affecting consumers and producers who rely on imported input goods. We have also seen that growing uncertainty is dampening business’ investment appetite. The tariff increases have already had an impact on Chinese and US GDP. NORGES BANK ECONOMIC PERSPECTIVES 14 FEBRUARY 2019  The negative effects of the measures taken so far are fairly moderate (Chart 3). The danger is that trade tensions deepen, and that retaliatory measures lead to a negative spiral. More countries could be drawn into the conflict, with an even broader rise in tariff rates. In that case, not only the United States and China would be affected, but also Europe and the rest of the world. Chart 3 Trade tensions curb world GDP.

Andrés, J., López-Salido, J. D. and Nelson, E. (2004), “Tobin’s imperfect asset substitution in optimising general equilibrium”, Federal Reserve Bank of St. Louis working paper 2004003A. Borio, C. and White, W. (2003), “Whither monetary and financial stability? The implications of evolving policy regimes”, in Monetary Policy and Uncertainty: Adapting to a Changing Economy, pp. 131-212. Federal Reserve Bank of Kansas City: Kansas City. discussed in Bernanke, Gertler and Gilchrist (1999). There is also the strand of work stemming from Kiyotaki and Moore (1997). 13  Other recent contributions on the bank capital channel include Aikman and Paustian (2006); Chen (2001); Meh and Moran (2004); Van der Heuvel (2008). 14  Recent contributions with richer models of the banking sector, but less developed specifications of the macroeconomy include Goodhart, Sunirand and Tsomocos (2005, 2006) and Uhlig (2009). BIS Review 101/2009  17  Bean, C.R. (2003), “Asset prices, financial imbalances and monetary policy: are inflation targets enough?” in Asset Prices and Monetary Policy (eds. A. Richards and T. Robinson), pp. 48-76. Reserve Bank of Australia: Sydney. Bernanke, B. S., (2004), “The Great Moderation”, remarks at the Eastern Economic Association, Washington, DC, 20 February. Bernanke, B. S., (2005), “The global saving glut and the US current account deficit”, Sandridge Lecture, Virginia Association of Economics, Richmond, Virginia, 10 March. Bernanke, B. S., and Blinder, A.S. (1988), “Credit, money and aggregate demand”, American Economic Review, vol. 78(2), pp. 435-439. Bernanke, B., and Gertler, M. (2001), “Should central banks respond to movements in asset prices?”, American Economic Review, May, 91(2), pp.
Nevertheless, the Executive Board did not find  BIS Review 39/2005  1  grounds – given the prospect of continued low inflation for a period ahead – to deviate from expectations in the money and foreign exchange markets at present.” There are a number of uncertainties that may lead to different developments than those indicated by the projections in the Inflation Report. Increased current account imbalances in major countries along with high oil prices and volatile oil markets are contributing to the uncertainty concerning developments in the global economy. Household debt One area of uncertainty associated with the economic outlook in Norway, stressed by many observers, is the high level of and strong growth in household debt. In the rest of this speech, I will consider possible causes of this strong growth. I will also say something about the possible consequences of debt accumulation for the economic outlook in general and for financial stability in particular. I. Causes of household debt growth  Debt is growing far more rapidly in the household sector than in the enterprise sector. Growth in household debt has generally been high during the last five years. The interest rate reductions since December 2002 seem to have amplified debt growth somewhat. It appears that this high growth will continue in 2005. Growth in debt has also been appreciably higher than income growth, so that the debt-to-income ratio, often referred to as the debt burden, has increased markedly.

Of a total of NOK 1 021 billion in loans to wage earners, pensioners, social security recipients and students at the end of 2004, NOK 208 billion represented non-mortgage loans. Since the third quarter of 2004, growth in mortgage loans has slowed while growth in other loans has increased. Growth in mortgage loans, however, remains higher. In the last decade, loans from finance houses to households have increased from three to four percent of household loans and now amount to a total of NOK 47 billion. Each quarter Kredittilsynet (Financial Supervisory Authority) conducts a survey of selected finance companies that are engaged primarily in consumer financing. Consumer loans are defined here as both card-based loans and other unsecured consumer loans. The survey shows that several of the finance companies in the sample have recorded strong growth in lending. However, growth has slowed. The survey shows that compared with total loans to the household sector, the number of defaults on consumer credit is high but relatively stable. Losses are low. Profitability in these companies has improved considerably in recent years, illustrated here by net interest income as a percentage of average total assets. This indicates that the enterprises take into account the high risk when pricing consumer credit. At the same time, it is surprising that more new participants have not entered the market when profitability is so high. Some consumer loans are probably extended as mortgage loans. This possibility is closed to households that do not own their own dwelling.
As a result, the drop-off in economic activity that is connected, directly and indirectly, to the performance of the housing sector has not been as severe here as it has been in many other places around the country. Like much of Upstate New York, Albany’s housing market has proven more stable than much of the rest of the country. During the 2000–2006 housing boom, Albany’s house prices rose by 85 percent, much higher than the roughly 50 percent average increase in Upstate New York as a whole and almost as high as the doubling of house prices seen nationally. Unlike the rest of the nation, though, the region’s housing market has been comparatively stable since then. Prices have declined by about 7 percent from their peak here, compared with a decline of 32 percent nationally. Nonetheless, declining house prices coupled with a sluggish jobs recovery has increased financial pressures on families. During the recession, all across the nation, high levels of debt led to a soaring number of delinquencies. Many families found that they needed to reduce their debt to more sustainable levels. Drawing on the special consumer credit panel I mentioned earlier I can tell you that these trends have certainly affected people in this area.3 But the good news is that the effects have not been quite as severe here as they have in much of the country.

Some economists stress that a published interest rate forecast may create problems in the practical implementation of monetary policy. Results published in the literature, however, seem to point in a different direction. First, any constraints a published interest rate forecast might entail are not necessarily a disadvantage; on the contrary, they may be an advantage. Indeed, if interest rate expectations can be influenced, a response pattern that is binding for a shorter or longer period will in many cases be useful for a central bank. By being committed to a response pattern, the need for interest rate changes today may be reduced. From mid-2003 to mid-2004, for example, the Federal Reserve was concerned that inflation might fall too low. The Fed therefore indicated that market participants should expect an expansionary monetary policy for longer than usual in periods of increasing activity. 5 Norges Bank has made similar statements about the future interest rate. For example, from mid-2004 to the beginning of 2005, the Bank stated that “the prospect of continued low inflation in Norway also implies that we should lag behind other countries in setting interest rates at a more normal level”. Statements such as this are intended to influence market expectations. Similarly, there may be advantages of publishing an explicit interest rate forecast. This may lead to commitments that increase the credibility of consistent interest-rate setting by the central bank.
Reforms are conducive to wage moderation and to the containment of the inflation rate, with the potential to initially dampen domestic demand owing to lower wages, the increase in the real value of debt and, in some cases, the increase in real interest rates. However, these initial adverse effects could be offset and, as experience shows, exceeded by gains in competitiveness, increases in exports and gains in confidence that positively affect consumption and investment decisions and generate employment and growth. Another matter to be highlighted is that of the synergies between structural reforms and monetary policy. The Spanish economy is a good example of a positive interaction and of the fact that, at least occasionally, reforms and policy are mutually reinforcing. After a period in the euro area with considerable stress combined with very marked segmentation in the credit markets, despite the ECB’s increasingly loose monetary policy, this interaction between structural reforms and a strongly expansionary monetary policy finally began to be felt in late 2013 and, naturally, in 2014, in any event in Spain. Unquestionably, some of the reforms launched in 2012–2013 contributed to relieving stress on the financial markets owing, above all, to their contribution to improving confidence. The improvement in public finances governance in the euro area no doubt played a key role in enhancing confidence.

We will be hearing from leading voices in the field on: Macroeconomics of Climate Change Blended Finance Transition Planning Nature-Related Risks Let me briefly share what the NGFS is doing in each of these areas, to set the backdrop for today's Workshop. Macroeconomics of climate change Both the physical and transition dimensions of climate change will significantly impact output, inflation, labour markets, and the long-term growth potential of economies. 1/5  BIS - Central bankers' speeches  The NGFS is seeking to develop the tools necessary for central banks and regulators to make sense of how climate change will affect the macroeconomy and financial system. This includes work on: identifying relevant climate-related data; developing analytical frameworks and models; understanding the implications for monetary policy; and designing climate scenarios for stress testing. The NGFS has brought together an expert network of statisticians and data scientists on climate-related data. They will help member central banks and supervisors build up capacity on climaterelated data such as adverse climate events, carbon emissions, energy intensity, and so on. This will include building climate data directories and setting up green finance data hubs in central banks. The NGFS is developing theoretical frameworks and quantitative models to evaluate the impact of climate change on the macroeconomy. Policymakers need to better understand the channels by which physical risks and transition efforts can affect the economy.
The blue bars in Chart 3 plot what firms expect to happen to their own output and employment in that case. And, over time, the impact of that nervousness has started to come through in the official data. It didn’t to begin with, in the first year or so after the referendum. The series is quite volatile, and prone to revision, so one should be careful not to over-interpret shorter-term movements. But on current estimates, business investment was 3% higher at the end of 2017 than in mid-2016. Chart 1: Businesses invest less when  Chart 2: Brexit is an important source of risk for  uncertainty is high  UK businesses  Sources: ONS, Bloomberg Finance L.P., CBI, Consensus Economics, Dow Jones Factiva, Eikon from Refinitiv, GfK (research on behalf of the European Commission) and Bank calculations. Growth in business investment is one quarter ahead. Sources: Decision Maker Panel and Bank calculations. 1  See Bloom et al (2019) for more information on the Decision Maker Panel. 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  Chart 3: Firms say output and employment  Chart 4: Investment has been weaker than in  would fall in a no-deal, no-transition Brexit  previous expansions  Sources: Bank of England and Bank calculations. See Bank of England (2018, 2019). Sources: ONS and Bank calculations.

6  7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  A related point is that not all reductions in uncertainty are beneficial. In particular, guaranteeing what firms themselves see as the worst case outcome (in the simple model that would mean setting q = λ = 1) is unlikely to improve matters even if it “resolves the uncertainty”. Quite the opposite: it would mean only that projects that have so far been postponed, precisely for fear of such an outcome, would then be cancelled for good. Another set of implications arises from the expected duration of the uncertainty (E[T] = 1/q). It’s helpful in this respect to re-express [2] as follows: E[T] (R – ρ) ≥ λL  [3]  Writing the result this way makes its interpretation that much more intuitive. On the right-hand side is the benefit of waiting until the event is realised, i.e. the (probability-weighted) loss the firm could thereby avoid. On the left-hand side is the cost of waiting, namely the excess return the investment would earn in the meantime. And the longer the wait (the higher the expected duration of the uncertainty E[T]) the greater the foregone income is likely to be. If the firm expects a really long delay before the news comes through (high E[T], low q) it might well decide it just has to get on with things and make the investment anyway.
The word “expect” is doing more work in this sentence than you might have appreciated. In working out what returns firms should expect to receive from their assets, it is necessary to make assumptions about how many of those assets will go bad – for instance, how likely is it that a company in whose bonds an insurer has invested will go bust and stop paying interest? Or how likely is it that an insurer will get into trouble, be forced to sell its asset for less than it originally paid and recognise a loss? Due to these possibilities it would obviously be wrong to recognise all the returns on assets upfront, because some of them will not materialise – at the very least these need to be deducted. Under the MA this is done in a mechanical way, based on returns and losses experienced in the past. The problem with this approach is simply that expected losses based on averaging the past may or may not be a good guide to the future. [4] There are plenty of examples in finance and elsewhere where the past has not proved a good guide to the future – recent moves in some commodity markets is a topical example, and the performance of subprime US mortgages in the financial crisis is another which illustrates the serious costs that can be incurred when we get this wrong.

Additionally, with this arrangement, we aim to reduce the sensitivity of the costs of holding Turkish lira required reserves against the CBRT’s policy rates and thus strengthen the automatic stabilization feature of the Reserve Option Mechanism. Distinguished Guests, As for the loans, we see that the macroprudential measures and our tight monetary stance have helped to keep the pace of loan growth at reasonable levels. The annual rate of total loan growth is 16 percent, below the 2007-2013 average of 23 percent, as of October 2014. In terms of loan trends, the annualized growth rate of consumer loans continues to hover at low levels while commercial loans remain relatively more robust (Charts 7 and 8). I would like to emphasize that this loan outlook will both restrain medium-term inflationary pressures and support the improvement of the current account balance. 4  BIS central bankers’ speeches  2. Macroeconomic developments and assumptions  Distinguished Guests, Now, I will talk about the macroeconomic outlook and our assumptions on which our forecasts are based. First, I will summarize the recent inflation developments, and then continue with the domestic and foreign demand outlook. Annual consumer inflation fell by 0.3 points quarter-on-quarter to 8.86 percent in the third quarter of 2014, while inflation excluding unprocessed food and tobacco at 8.37 percent was mostly consistent with our July Inflation Report forecasts (Charts 9 and 10). Due to adverse weather conditions and cumulative effects of exchange rate changes, food prices remained the subcategory making the greatest contribution to inflation.
Before I go any further I’ll give the usual Fed disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System. Dual mandate Apart from a stint running a pizza shop, I’ve worked in the Federal Reserve System for my whole career, nearly 25 years. And I’m not alone. When you ask people at a Federal Reserve Bank how long they’ve worked there, their response is often measured in decades, not years. What makes them stay? Working for a mission-driven institution. And speaking of our mission, the Federal Reserve has two goals: maximum employment and price stability. We want our economy to reach its potential in terms of jobs and growth and we want low, stable inflation. While these two goals are critically important, they are broad and highlevel. The monetary policy decisions we make have important effects on the overall number of jobs and wages, but they don’t determine what economic growth looks like across communities, or who benefits from it. That’s why our outreach and community-based work is a key priority. It’s an opportunity for us to take all of the data, all of the things we know about the economy, and help one another as we tackle the very real issues that shape the everyday lives of Americans. Equitable Growth We’re closing in on the longest economic expansion on record, unemployment is at historically low levels, and inflation is close to our 2 percent target.

I just came back from a trip to Puerto Rico and the U.S. Virgin Islands, which are part of the New York Fed’s district. The overwhelming feedback I received from community leaders there was how useful they found our research reports for thinking about how to strengthen their local economy. An example closer to home is the work we do looking at the credit behavior of households at the zip code level. Analysis from the New York Fed is used by Financial Empowerment Centers across New York City to support people on low and middle incomes get out of financial trouble and build a credit profile. It also acts as a barometer for the success of programs, which helps practitioners learn which interventions are most effective. 2/4  BIS central bankers' speeches  Convene As well as connecting people with research and data, we play an important role creating spaces where different stakeholders convene, discuss the challenges and opportunities facing their communities, and share best practices. This is where our workforce development program comes in, and it’s an area where Federal Reserve Banks from across the country have been collaborating to share knowledge among key stakeholders. The work we’re doing bringing together schools and local employers is also in this vein. We owe it to young people to ensure that their investments in education pay off and that there’s a job at the end of all their hard work and study.
It is clear that in this case it is the higher repo rate path that gives the least overall squared deviations during the forecast period – its dots are furthest to the south west, closest to origo. The lower repo rate path gives the largest deviations. But if inflation is instead measured in terms of the CPI and resource utilisation is measured in terms of the GDP gap, the result is the opposite. Here, it is the lower repo rate that gives the overall smallest square deviations. Thus, the variables used to measure inflation and resource utilisation can play an important role regarding which repo rate path one prefers. It is also worth noting that the repo rate path in the main scenario does not give the smallest overall mean square gap in any of these cases.5 This has been the case also on other occasions. At first sight, this may seem rather strange. But let me explain why it is not necessarily so – and also point out some other circumstances that can complicate the step from simple theories to practical policy. Interest rate scenarios produced in different ways A slightly technical explanation as to why an alternative interest rate path may give an apparently better outcome than the repo rate path in the main scenario concerns how the various scenarios were made. When we at the Riksbank make forecasts we use various macroeconomic models.

At the same time, we need to establish a common backstop to the Single Resolution Fund and lay the groundwork for the creation of an effective European Deposit Insurance Scheme. Significant steps in these areas are a precondition for a truly integrated euro area banking system and single money. The transmission of the ECB’s monetary policy remains at risk of being hampered in crisis situations as long as levels of depositor confidence differ across the euro area. The second thing we need to do is build a true single market in capital. Diversified capital markets play an important role in sharing risks and smoothing private consumption over time. For this reason, the ECB has been a strong supporter of the European Commission’s plan for a capital markets union. To be robust, the capital markets union needs effective regulation and supervision, for example in relation to investment firms and clearing. Not least given the United Kingdom’s imminent departure from the EU, we need to make concrete progress on this agenda and complement it with an ambitious, longer-term vision. Conclusions I would like to end by mentioning that recent Eurobarometer data show that support for the euro stands at a record high of 77% among euro area citizens and a large majority believe that their country’s membership of the EU is a good thing. Support for the European project is particularly strong in Ireland, where with 88% of citizens the single currency enjoys the highest level of support in the EU. Europe has to repay this trust.