samchain/econo-pairs-v1 huggingface dataset:
In the US, demand has played an important role: the US economy has more than recovered pre-pandemic levels of activity. So there are grounds for seeing US labour market tightness as a symptom of ‘overheating’ in the broader economy. This case is harder to make in the UK, where aggregate activity has still to regain pre-pandemic levels on the latest vintage of data. As a result, adverse supply effects seem to play a larger role in Britain. That said, vacancy rates have reached historical highs in the UK over the past year, perhaps redolent of strong demand for labour and echoing developments on this side of the Atlantic. But high vacancy rates have been associated with high hiring rates: the labour market has exhibited a high degree of ‘churn’, with many people moving jobs. In part, this may reflect a process through which workers are allocated to more productive activities, after the pandemic – and the UK’s furlough scheme introduced in response to it – had constrained their flexibility to move from one job to another. Behind labour market tightness in the UK lies a decline in participation rates among the working age population, particularly those in the 50-65 age group. The reasons behind this decline remain the subject of debate, but the impact of the pandemic on early retirement and long-term health, as well as underlying demographic developments, all seem to have played a role.

Much as it did in 1994 in the U.S., the hard part lies ahead. Appendix Graph 1 Average Annual GDP Growth Rates 0  1  2  3  4  5  6  7  8  9 [%]  France Germany Ireland Italy Japan Korea Spain Switzerland United Kingdom United States  1970-1980 1980-1990 1990-1995 1995-2003  EU-13 (EU-15 excl. Austria and Luxembourg)  Source: OECD, Productivity Database, February 2005. 4  BIS Review 27/2005  Graph 2 Average Annual Growth Rate of Labour Input: EU-13 vs. U.S. [%] 1.5  1.0  0.5  0.0  -0.5 1990-1995  1995-2003  -1.0 EU-13 (EU-15 excluding Aust ria and Luxembourg)  Unit ed St at es  Source: OECD, Productivity Database, February 2005. Graph 3 Growth of Labour Productivity: EU vs. U.S. 4.0% EU - U.S.  U.S.  EU  3.0%  2.0%  1.0%  0.0%  -1.0%  -2.0%  -3.0% 95  96  97  98  99  00  01  02  03  04  05  Source: Datastream (OECD Economic Outlook). BIS Review 27/2005  5  Graph 4 Average Annual Growth Rates of Labour Productivity: EU vs. U.S.  [%] 4 3 2 1 0 EU-11 U.S. EU-11 minus U.S.  -1 -2 1970-80  1980-90  1990-95  1995-2000  2001-2003  Source: OECD, Productivity Database, February 2005. 6  BIS Review 27/2005
However, we cannot rule out that more serious events can occur with more severe and longer-lasting effects on global markets, in light of their renewed political difficulties to implement fundamental structural reforms, and where the banking sectors are still dealing with deteriorating portfolios due to slow economic activity. Another risk coming from abroad has to do with how the conventional and unconventional measures of monetary stimulus will ultimately be withdrawn in the United States. Having no history in this creates uncertainty in the markets, mainly about the financial effects it might have. There may be an overreaction of the markets, with increased stress and sharp rises in long-term interest rates. The rising cost of financing this would entail for emerging markets and some Eurozone economies more dependent on external financing, would pose important policy challenges for them. In Chile, this could lead to increases in both the cost of external financing of companies and banks and higher long-term interest rates domestically. As emphasized in our Financial Stability Report, it is important for banks in this context to keep the exposure of their balance sheets at bay. In any case, the U.S. monetary authorities have argued that if confronted with an unwanted reaction the process could be delayed or even reversed to some extent, so it is possible for the effects of the withdrawal to be fairly limited.

Total corporate debt has remained stable as a percentage of GDP. In the domestic market, the corporate bond placement has remained high and many companies took advantage of the favorable global conditions and resorted to external financing via bonds. In addition, stock issuance increased and there was a substantial inflow of foreign direct investment, including capital and credit. Dynamic consumption continues to rely on favorable labor market conditions, with near record-low employment rates and personal income growing strongly. Consumer confidence, despite receding recently, is still on the optimistic side while the household debt to income ratio is stable. However, there are significant changes in composition, with banking debt overriding other credit suppliers. The available data suggests that such dynamism might be concentrating in middle- to upper-income households. And I say “suggests”, because neither us nor the industry supervisors have the whole picture of overall household borrowing. In a dynamic financial system, with many important non-bank lenders such as ours, we cannot afford to go on without a consolidated registry of debtors. Thus, I would like to reiterate, as has the Financial Stability Board (FSB), that it is crucial to push forward the bill that will improve the current system for sharing credit information. Both headline inflation and its core indicator CPIEFE, that is, the CPI excluding foodstuffs and energy, have remained near 1 percent annually.
I mentioned another possible explanation: that the consensus on wage differentials had broken down at the same time that the opening of the labour market vis-à-vis abroad put pressure on those differentials – in some cases, in the direction opposite to that demanded by labour market organisations. This is consistent with theories indicating that, other things being equal, if there is a broader consensus about income distribution, a lower level of unemployment will be consistent with low and stable inflation. Other possible explanations should be borne in mind, however, in any interpretation of developments in the labour market. One is that the recent improvement in terms of trade has created greater scope for non-inflationary wage increases. This is true, to the extent that the improvement is not merely transitory. But even if it is merely transitory, it keeps inflation from rising above target for a while, even if wage increases are well in excess of the level that is consistent with the target in the long run. Another possible explanation is that the equilibrium real exchange rate is rising at present because of the improvement in terms of trade and the reduction of external debt, owing in part to the settlement of the failed banks’ estates and the release and tying-up of offshore krónur. To the extent that this does not surface in a nominal currency appreciation, it will put temporary pressure on wages and prices. It seems to me that a number of signs indicate that all of these explanations apply to some degree.

This is because experience has shown that it is difficult for small economies to pursue independent monetary policy if interest rates are their only policy instrument, their currencies float freely, there are no restrictions in residents’ unhedged foreign exchange risk, and financial integration with the rest of the world disconnects the transmission of monetary policy through the interest rate channel. I would like to pause here, as this last item is of particular importance for Iceland at present. I conducted a study of this topic during my tenure with the Bank for International Settlements in 2004–2009.1 I delved into it again last summer, as can be seen in the speech I gave in Singapore last August, which can be found on the websites of the Bank for International Settlements and the Central Bank, and in my forthcoming paper, to be published in the  1  4  “Financial globalisation: key trends and implications for the transmissions mechanism of monetary policy”. BIS Papers No. 39, April 2008. http://www.bis.org/publ/bppdf/bispap39c.pdf  BIS central bankers’ speeches  Singapore Economic Review. These writings contain more detailed explanations, but if we consider the main points and allow the tendencies entailed in financial integration to develop to their limit, the outcome is abundantly clear. The interest rate channel of monetary policy becomes utterly clogged up in small, open, and financially integrated economies where longerterm interest rates are determined by rates in large economies. Monetary policy transmission shifts entirely to the exchange rate channel.
For that purpose, they will still want low cost trading and settlement mechanisms that minimise their exposure to counterparty risk and the impact on their balance sheets. So there are perhaps some tensions between the various forces at work here. To take another example, economies of scale in trading, clearing and settlement suggest that to minimise costs firms should encourage consolidation and integration of these activities within a market. Yet the major firms have, understandably, been very reluctant to allow the dominance of a single supplier. For example, EBS (Electronic Broking System) was set up by the major banks to offer an alternative system for foreign exchange trading. Ladies and Gentlemen, let me finish by saying that it is difficult to draw firm conclusions about the future structure of the financial services industry. If it was, strategic decision making would be easier than it seems to be. But financial service businesses based in the UK start from a strong position, and are well placed to thrive in an environment that will evolve at an increasing pace, become even more competitive, and place an even greater premium on innovation. The Bank of England will monitor and analyse the developments very carefully – both because we want UK financial services to thrive, and because in the pursuit of our financial stability responsibilities we need to be able to spot potential problems as quickly as possible. BIS Review 43/1999  6

As attendees at previous regional press briefings may recall, the New York Fed produces economic activity indexes (CEIs) to help monitor the performance of the regional economy. Based on these measures, activity continued to expand in both New York State and New York City through June, with growth decelerating only modestly in the second quarter. By contrast, the recovery in New Jersey’s economy has been more sluggish, though the index for New Jersey did pick up in 2011, which is an encouraging development. We monitor Puerto Rico using an index produced by the Government Development Bank for Puerto Rico. This index shows that the recession there, which started back in 2005 – well before the mainland’s – continues to be a challenge. The sharp decline in activity that persisted well into 2010 appears to have subsided. However, for some time now the island’s economy has experienced a series of fits and starts. As such, the recent improvements will need to be sustained for a period of time before we’ll know that they are breaking out of the pattern of mixed signals. The performance of regional housing markets continues to influence the pace of recovery for local economies. Many of the places hit hardest by the housing bust have had a particularly weak recovery. Although housing markets remain fragile, an encouraging development here is that home prices appear to be firming across much of our region.
So, although growth will not be very strong I do not see them entering a recession again. Even the hardest hit Southern European and Mediterranean countries have the potential to see growth as early as next year. Which is a positive indicator for our more traditional export firms; as several of these countries act as their largest trading partners. Our confidence is building. If this year we will see a 2.2% increase in overall growth we predict next year can yield 3.5% and it can certainly grow from there to over 4% in ensuing years. First-movers entering this market will be the ones benefiting from the immediate and privileged market access Do you see Macedonia’s current inability to enter the EU due to the naming dispute with Greece as a component that is putting a relative cap on the growth figures you just mentioned? If we look from an economic point of view, judging from rating agency criteria that takes into consideration political uncertainties such as the ongoing naming issue, it is safe to assume that our rating is lower than what it could be. The resolution of this dispute and the resulting  2  BIS central bankers’ speeches  increase in rating will certainly lead to greater investor confidence as well as better terms on financing in the international markets. There would also be access to more EU funds that could be used for critical infrastructure developments.

As a result, some people began to orient more towards the MKD. Traditionally our country, like most former Yugoslavian countries are highly Euro-rized, which means people save and use credits in Euros, with a 65% Euro to 35% MKD ratio. During the crisis and continuing today, the ratio of households and their propensity to save in MKD has elevated to 50%. BIS central bankers’ speeches  1  You have been in your post for 2 years with 5 more remaining. How do you view the future development of the economy based on the government’s FDI promotional campaigns that are taking place currently across the globe? We have witnessed in the past 4–5 years several very important foreign direct investments. Some of them are so large that they already equate to roughly 17% of our exports, with the majority of the companies focused on component manufacturing for the automotive industry. There are also several large firms that are in the pipeline which have shortlisted Macedonia for their capacities. Importantly, these incoming large-scale investments are also bringing diversification to our exports, which are traditionally based in textiles, agriculture and metals. It is worth noting that several of these firms not only made the decision to enter Macedonia but are currently in expansion mode based off their operational successes here, to the degree that I predict in 3 years the current and pending FDIs can equate to 30% of our exports.
Cross-border flows of goods and services, money, people and especially information have all risen to their highest levels, in some cases, ever. Yet at the same time, levels of productivity across countries have tended to diverge. So too, as a result, have levels of GDP per head. Technological trickle-down and GDP catch-up has gone into reverse gear at the same time external openness has switched up a gear. How do we explain this? (b)  Technology Transfer  To begin doing so, it is useful to recognise that two distinct forces are at work when technology is transferring across countries or companies. 31  First, there is technological adoption – the time it takes a new technology  to first reach a country or company. Second, there is technological penetration – the extent to which technology then reshapes processes and products in a company or country. 32  Economists often refer to the first of these as the extensive margin, the second as the intensive margin. In principle, we might expect these two aspects of technology transfer to move in lockstep. The two dimensions to diffusion should be complementary. In practice, international evidence seems to suggest a puzzling divergence in the two dimensions of technology transfer across countries. Average adoption lags for new technologies have tended to fall over time, consistent with rising cross-border flows of ideas, capital, goods and services and people.

Chart 16 illustrates this for one technology - computing. It shows the percentage of employees in a company using a computer on three dates (2002, 2008, 2015). The good news is that it shows a clear trend towards increased employee computer use over time. 35  European Commission (2018). 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  The distribution of computer use is, however, clearly twin-peaked. There is an upper tail of companies where more than 90% of staff use computers. By 2015, this had increased to a little under half of all companies. But there is also a large, if diminishing, tail of companies where employee use of computers is much more modest. For example, even by 2015 around 40% of companies had fewer than half of their employees using computers. And there were still 20% of companies where fewer than one in five employees used computers. This picture is patchier still for more advanced technologies. Chart 17 looks at the distribution of the proportion of employees in UK companies with access to a portable device with internet access on two dates (2011 and 2015). It, too, is twin-peaked. But the upper peak is now a very modest one, containing only around 10% of firms. And the lower peak, by contrast, is Himalayan. The fraction of companies where 50% or less of employees use portable devices is around 80%. Patterns of technological adoption and penetration among UK companies, then, tell a broadly consistent story.
On redistribution, if the past repeats itself Mark Twain-style, the gap between skilled and unskilled workers could further widen as hollowing-out intensifies. This could bring pressures to reallocate income from rich to poor, from owners to workers (Brynjolfsson and McAfee (2014)). It could also mean the gap between capital (those who own the robots) and labour (those who work for them) shares could widen further. If so, that may require a rethink of the relative roles of capital and labour, not least when it comes to running public companies. At present, owners of capital have the whip hand – no longer literally, but legally – when it comes to running public companies. That is why shareholders are often called, quite misleadingly, the “owners” of a company. This model of corporate governance has served the world well for over a century. But, today, it may not always make for the best outcomes, either for companies themselves or for wider society (Haldane (2015)). And a further tilt in the balance of power in favour of capital could make that situation worse. There are already corporate governance models which strike a somewhat different balance. Interestingly, many of today’s largest and most successful technology companies are in private hands. Even for those technology companies which have gone public, ownership and control has often been separated from financing through dual-class share listings which retain voting rights for the founders and workers.

As Mark Twain almost said, labour market history, if not repeating itself, has certainly rhymed. This should come as no surprise. As in the mid-19th century, this is a time of huge change in the jobs market. Rarely a day passes without concerns about job prospects in some of the UK’s most iconic industries, from steel to oil and gas to cars. And rarely a week passes without evidence of jobs and industries being fundamentally reshaped by globalisation and technology, be it the digital economy, the sharing economy or even the Second Machine Age. There is no shortage of explanations for these searing developments. They are part cyclical, as the global economy continues to recover from a financial crisis which is likely to be the most costly since the Great Depression. But these changes are also in part structural given tectonic shifts in demography, inequality and technology, to name but three. None of these challenges is of course entirely new either. My own interest in economics was spawned in the early 1980s by just such a challenge. At that time, more than 3 million people were unemployed in the UK, or almost 12% of the working population. In Yorkshire, where I grew up, the unemployment rate peaked at close to 13%, hit by a double whammy of deep recession and a contraction in steel, textiles and coal-mining. Unemployment at that stage was not for me a statistic. Nor was it the bloodless theorising I would go on to study at university.
As the structure of the financial system changes, the identity of variables that capture financial conditions naturally changes. Let me now discuss the paper in more detail. I will do this in two steps. First, I will discuss the considerable contributions of the paper. Second, I will talk about where the paper might be extended and other areas of future research that might seem appropriate. In general, I liked the paper. I think it makes some important contributions in how to construct a more complete and robust financial conditions index. In particular, I thought the paper makes two important points:   Financial conditions should measure financial innovations, not changes in financial variables that are due to past changes in economic activity. The endogenous components of financial conditions should be removed in the construction of a financial conditions index.   Both neoclassical (yield curve and stock prices) and non-neoclassical (credit availability) variables should be included. The GSFCI that I helped to develop only included neoclassical indictors and I think that was (and is) a shortcoming. The authors deserve considerable credit for constructing a financial conditions index (FCI) that is more rigorous and complete than any that have been developed in the past – 44 financial variables divided across five categories. Moreover, this is not just innovation for its own sake. The new FCI does a better job than single-factor models in forecasting real gross domestic product (GDP). BIS Review 23/2010  3  So what are the shortcomings of this approach?

On the part of the financiers, it is crucial for financial institutions to build their capacity and capabilities to be able to better assess the viability of green projects, given the complexity and ever-evolving technology. Limited technical know-how on the part of the financial institutions on the green sector can lead to hesitation to provide funding or any form of protection or guarantees due to perceived risks. Limited financial literacy of project sponsors such as corporates and micro, small and medium enterprises (MSMEs) would also put them in a disadvantaged position in project evaluation. Many may also be unaware of the available financing instruments and suitable financing for their green ventures. Although Malaysia is a high saving nation with high gross national savings, averaging above 20%, without addressing this, there will continue to be a mismatch between where the money sits, and where it is needed for green investments. Green investments would continue to appear aspirational rather than a necessity. 1/3  BIS central bankers' speeches  The pursuit of climate action, including expanding climate finance is one that calls for action from four key actors – first, the Government; second, businesses; third the NGOs and civil societies; and finally, the financial sector. Businesses need to pay attention to the environment. Simply put, there can be no profit without the planet. The NGOs and civil societies could play diverse roles in support of the climate agenda including creating deeper awareness and highlighting problems.