samchain/econo-pairs-v1 huggingface dataset:
Productivity in the economy as a whole Percentage 12-month change 5.0  5.0  productivity  4.5  average 1981-1990  4.5  4.0  average 1991-2002  4.0  3.5  3.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  -0.5  -0.5 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 Source: Statistics Sweden  There is reason to reflect over the explanations that might lie behind a productivity increase of a more fundamental nature, similar to that we have seen in the United States in recent years. Personally, I have found it helpful to use the events of the late 1990s as a starting point; a period when productivity was also surprisingly strong. The driving force behind this development is usually said to be technological progress in information and communications technology, which led to productivity increases in the IT-producing industry and price falls on IT products. In addition, there was extensive investment in IT capital in other industries, also stimulated by favourable price developments, which resulted in higher productivity outside of the IT sector. Expressed in a different way, productivity growth at this stage was said to be driven by increases in total factor productivity within the IT-producing industry and by an increased IT capital intensity in other sectors of the economy.

The downturn was remarkable symmetrical and counteracted by a series of interest rate cuts throughout the western world. Sweden was also affected by this downturn, of course, although to a lesser extent than many other countries, particularly because fiscal policy was more expansionary, but also due to the krona being undervalued. Resource utilisation was therefore assessed to be higher in Sweden than in many other areas, which affected the relative interest rate situation. At the beginning of 2002, a wave of optimism began to spread, but it proved short-lived. The main reason for this was the increasing geopolitical unease concerning Iraq and later the war in Iraq. A recovery in the global economy was still expected, but at a later date. The weak economic activity led to further easing of economic policy during 2003. The United States Federal Reserve, the Riksbank and other central banks continued to cut their instrumental rates to all-time low levels. Now most indications are that both the Riksbank and other analysts were slightly too pessimistic in connection with the Iraq war, particularly with regard to the view of economic activity in the US economy, but also developments in Asia. During the second half of 2003 we have had reason to make a further upward revision to our assessments of global economy growth and the picture of the global economy as a whole looks good at present. The US economy is expected to grow at a slightly more rapid rate than we estimated in the December Inflation Report.
The most important provision relating to the appropriation of profits of the Central Bank is the requirement that the Bank should build reserves out of profits to back its demand liabilities, viz., currency issue and demand deposits maintained by the Bank. Exter’s recommendation was that such reserves should be equal at least to 15 percent of the Bank’s domestic assets. Such reserves need not be built up against foreign assets, since those claims on the rest of the world would in anyway back the currency and demand liabilities. But, the domestic assets which are created by the Bank at its own discretion have no value in the domestic economy in a severe crisis. Since the build up of the reserves would prevent the transfer of profits to the government, Exter concluded that it would “prevent them from adding to the expansion of central bank credit”. Given the ever rising provisional advances granted by the Central Bank to the government and its permanent nature making such advances another form of implicit profit transfer, it is questionable whether the minimum of 15 percent is an adequate backing for the Bank’s currency and demand liabilities. For the provisional advances, there is no any collateral placed by the government with the Central Bank. Hence, they are akin to unsecured overdrafts given by a commercial bank to its customers.

The Bank’s contribution must necessarily be a longrun contribution. The Bank does not itself produce goods and services, but it should, by creating the right monetary conditions enable the country…” to do so. What Exter repeatedly maintained was the Central Bank was only a necessary condition for future prosperity. That necessary condition was to be created by maintaining price stability so that the economic agents could make economic decisions based on long-run economic prospects. Since the Central bank does not produce goods and services, it cannot directly get involved in economic activities. It is, therefore, the task of the government and the private sector to take appropriate measures to create wealth in the society. The only weapon of the Central Bank is to print money and such money, by changing the price levels, acts only as an illusion. Hence, Exter thought it necessary to warn those who had been advocating the Keynesian type of ideology to raise government expenditure through printed money. In the Exter Report, he argued that higher income created through money creation would simply stimulate consumption of imported goods and precipitate serious balance of payments difficulties. A similar view has been expressed by Dr Goh Keng Swee, economic architect of Singapore, when he clarified why Singapore chose a currency board system in preference to a central bank. He says that none of his Cabinet colleagues “believed that Keynesian economic policies could serve as Singapore’s guide to economic well-being”.
Fiscal sustainability also needs the economy to swiftly restore its dynamism and to achieve a high potential rate, since this is a fundamental means of financing the public spending increases to which population ageing is inevitably going to lead. The proposed pension  BIS central bankers’ speeches  3  system reform submitted by the government in January this year is also a key step towards curbing these costs. The financial markets have understood that this reform strengthens fiscal sustainability, so it would be advisable to set this proposal down in the form of legislation as soon as possible. Further, the sustainability to which the reform refers should be specified, so that a procedure is in place to ensure at all times that pensions growth is on a sustainable path. On the financial front, further headway in restructuring the banking sector has been made in 2010 and in 2011 to date. The most significant regulatory step here was the creation, in 2009, of the Fund for the Orderly Restructuring of the Banking Sector (FROB). The FROB has proven most useful in paving the way for merger and integration processes in the savings bank sector, which was highly fragmented. As a result, the number of institutions in the sector has fallen relatively quickly from 45 to 18. In those operations that received funds from the FROB, the institutions concerned submitted restructuring plans that envisage reductions in the number of offices and in other operating expenses.

Set against the serious circumstances then facing Spain, it may be said that the right approach was chosen, and the initiatives adopted helped mitigate the risks that had materialised. Despite this favourable change of course, the situation twelve months on remains complex, both from the European perspective and from the domestic standpoint of the Spanish economy. The European sovereign debt crisis is the most serious episode to impact the euro area since the single currency was founded. Its very nature and the difficulties in tackling it have, moreover, highlighted the shortcomings of the institutional framework of the euro. These include most notably the insufficient degree of fiscal discipline imposed by the Stability and Growth Pact, the absence of mechanisms to check the build-up of macroeconomic imbalances and the lack of tools with which to manage crisis situations such as those witnessed. Yet we must also acknowledge that there has been significant progress in recent months in these three areas. There have been various legislative initiatives to reinforce the Stability and Growth Pact, to establish arrangements for the prevention and correction of macroeconomic (other than fiscal) imbalances and, finally, to address crisis situations with the so-called European Stability Mechanism. But beyond the necessary reform of the economic governance of the euro, the difficult position of the Irish, Portuguese and, above all, Greek economies must be redressed. Tensions are at a peak and the outcome of the situation may have very important consequences for the euro area as a whole.
National economic policies are – or should be – trying to create stable monetary and fiscal frameworks to condition expectations of future economic policy. Policy surprises should not add noise to the news about economic fundamentals. It is in each of our national interests to avoid sudden or large changes in capital flows induced by volatile or unpredictable changes in economic policy. We want the monetary and fiscal decisions not only at home, but also in other countries, to be boring. Although domestic economic policies seem to have become increasingly boring over the past decade or two, their interaction has not. Consider two, related, examples. First, the rise in the US current account deficit to more than 6% of national income has raised fears of how the inevitable correction will eventually be achieved. Second, for much of the past twenty years, as evidenced by the Asian crisis of the late 1990s, we have worried about emerging market countries accumulating excessive dollar liabilities. Now we seem to be worried about their accumulating excessive dollar assets. Capital has flowed “uphill” from poor to rich countries. The invisible hand of international capital markets has not successfully coordinated monetary and exchange rate policies. Many countries are no longer the atomistic entities of textbooks whose policy choices have no effect on global prices: whether an exchange rate, a real interest rate, or the prices of particularly sensitive commodities such as energy.

When we discuss appropriate levels of T-LAC we should keep in mind that the less we strengthen the credibility of the system for going concern capital requirements, the higher banks’ gone-concern capacity to absorb losses will have to be. Concluding remarks So, to wrap up: I see no reason to pull the brake on regulatory reforms. We mustn’t lose sight of the long-term benefits of limiting the costs to society that financial crises cause. And, although a lot has been achieved, challenges still remain – especially when it comes to implementation, implementation monitoring and calibration of the whole system. As I said earlier, I do not know how all the different parts of the reforms will play out together. This only further underlines the necessity to constantly monitor what is happening, very much in line with what the organisers of this conference are doing. And as financial systems have an amazing ability to reinvent themselves, regulatory reform is a never-ending task. Therefore, we need forums such as this conference to evaluate where we are, and where we should be going – hopefully, then, we won’t have to make regulatory leaps quite as far as we were forced to this time. Thank you! 6  BIS central bankers’ speeches
There is a very nice paper in the latest NBER issue which is called “When Inequality Matters to Macro and Macro Matters for Inequality”. So indeed, that places within macro the question of inequality – inequality which has been increasing too much in the past few decades. Changes are being discussed and are taking place I just hope that progress could be quicker. How does that impact central banking? We thought we could just target inflation, now you are saying the next generation has to consider all of these different preferences of agents, multiple equilibria, inequality... Well first of all, central banks will always focus mostly on control of inflation, or more broadly macroeconomic stabilisation. The regime of flexible inflation targeting will not change in the visible horizon, and that is because it allows central banks to take a medium-term perspective towards hitting the inflation target. The advantage of adopting this gradualist approach to reaching the target, is – as [leading monetary economist and former Riksbank official] Lars Svensson has demonstrated very convincingly – that you can allow for some consideration of stabilisation of the 6/8  BIS central bankers' speeches  economy in trying to move gradually towards the inflation target. What will change are the models used to analyse the consequences of policy – and the set of instruments that will have to be used. Central banks in the future will have to respond in a different way if they want to achieve the overall objective of reasonable inflation and macroeconomic stabilisation.

It depends on the timing of such an episode. By then, I hope that fiscal policy can become more active in reacting to such a development. It will be very important to have more fiscal space, and to use it. And that’s related to some of the reforms that are needed for monetary union to work better. Presumably, interest rates by then would not be sufficiently high for a reduction in rates to be a sufficient response. Other monetary policy tools, then, would have to be used. I think one possibility would be to go into yield curve control, meaning targeting specifically some interest rates for longer term maturities. That would require lower amounts of purchases to be achieved than we have at the moment under our asset purchase programme. It would work because it could lower medium to long-term interest rates, which are the relevant ones for expenditure decisions. Yield curve control is being used already in Japan – and it works. It has not distorted markets. [Former Chair of the US Federal Reserve Ben] Bernanke has a good answer to this issue of distorting the markets, which is to say that purchases by the central bank of government securities with different maturities have exactly the same impact as a change in maturities done by the Treasury itself. The public sector always impacts the yield curve, one way or the other.
Importantly, the merger will further strengthen the alignment of strategies and priorities for the development of Malaysia’s payment systems. It is also expected to significantly reduce the time to market for delivering improvements. As a shared utility, PayNet will operate with a public interest objective to support and develop safe, reliable and efficient payment systems in Malaysia. PayNet will provide the necessary common infrastructure, and the banks will compete on providing financial products and services. In the long run, we should expect that the merged entity should venture abroad and strike foreign alliances to further expand network and reach. Over the next 12 months, PayNet will move forward with plans to develop and implement a Realtime Retail Payments Platform (RPP) that will facilitate interoperable mobile payments. A central feature of the RPP is the national addressing database that will allow payments to be made conveniently through the use of mobile phone numbers and National Registration Identity Card (NRIC) numbers, instead of referencing bank account numbers. In line with principles of fair and open access, the RPP will be open to both banks and eligible non-bank payment service providers. Besides making the technology roadmap for the RPP publicly available, PayNet will actively engage with the banking industry, FinTech community and other relevant stakeholders in the development of the RPP. PayNet will also direct its focus to promoting MyDebit, which is the domestic debit card network, as a low-cost alternative to displace the use of cash.

Significant efforts will be devoted towards increasing the acceptance of MyDebit, particularly among lower-tier merchants to lessen the use of cash to lower the operational costs for businesses. Some of the initiatives that will be undertaken by PayNet include enabling MyDebit to be used on mobile phones and operating a ‘shared token service’ for the local payment industry. In addition, PayNet will also expand the use of MyDebit to pay for transit services, including buses and trains, within the coming year. Supporting more inclusive governance arrangements through the transformation of NPAC While we can look forward to developments that will further transform our payment systems, the process also matters. Since the establishment of the National Payments Advisory Council (NPAC) in 2001 to advise on 3/5  BIS central bankers' speeches  and steer payment system development in Malaysia, we have worked to put in place a more inclusive process for setting the payment agenda. This aims to reflect the changing make-up of the payment industry and better anticipate the changing demands of users. We cannot hope to future proof the system without a good pulse on the expectations, constraints and incentives that drive payment behaviours and decisions to invest in innovation. It also often determines how quickly or slowly we can roll out planned initiatives, or even stay the course on these plans. This led to changes that were introduced last year to broaden the representation of the NPAC to include stakeholders on both the demand and supply sides of the payment market.
I am glad to say, looking back on 10 years as chief executive, the Hong Kong banking community can take pride in honouring its commitments and deserving society’s trust. Conclusion 52. Ladies and gentlemen, we at the HKMA – and all of you in the banking industry – have been through a great deal in the last 10 years. I have mentioned just a few of our many challenges, and our achievements. 53. As I said at the start, Hong Kong’s monetary and financial system is probably as secure as it has ever been – even though the infrastructure and markets are far more complex than ever. The Hong Kong banking industry is world-class in terms of its skills and people, in its dedication to inclusion, its preparation for technological change, and its awareness of the need for integrity and values. 54. But we must all be very clear that maintaining the quality of the industry is a never-ending task. Looking back, I am proud of what we have done collectively – but I know there will be much more to do in future. 55. Hong Kong at the moment is going through some troubles. But experience and history show us that Hong Kong overcomes problems, pulls together and moves on to the next stage of its development and success. I know that the banking industry will make a major contribution to that process. 56. The opportunities for our banking sector are opportunities for the whole of Hong Kong.

We have called the new macro model “Norwegian Economy Model”, or abbreviated “NEMO”. In the work on developing the model, we have benefited greatly from our close cooperation with the IMF and the Federal Reserve Bank of New York. We have also been inspired by and learned from the work of a number of other central banks, for example in the UK, Sweden and Canada. In addition, we have the benefit of a long history of model-building in Norway. NEMO belongs to a class of macroeconomic models that tends to be referred to as DSGE models, which stands for “Dynamic Stochastic General Equilibrium”. The term dynamic means that the entire path from the short term to the long term is modelled. The model is stochastic in the sense that the economy is exposed to random disturbances. Such disturbances can, for example, stem from a change in preferences, technology and market structure. General equilibrium implies that supply equals demand at all times in all markets, but there may be considerable temporary deviations from the long-term growth path. BIS Review 4/2005  5  A prominent feature of this type of model is that the behaviour of different economic agents is modelled explicitly. Each model parameter therefore has its own economic interpretation. Households maximise utility and choose the optimal distribution between work and leisure and between consumption and saving. Firms maximise profit. The authorities have defined specific economic policy objectives.
These long and short-term risks are, of course, linked – any overall misalignment with climate goals increases the short-term risks from a disorderly transition, possibly caused by extreme weather events or abrupt shifts in climate policy. A system-wide stress test can help supervisors and climate policymakers judge the adequacy of the current transition and whether further actions could be expected. As the Bank of England considers the timing and design of such a stress test, we are working with colleagues in the Network for Greening the Financial System (NGFS) to develop a small number of highlevel scenarios.16 And in our Climate Financial Risk Forum we will work with banks, insurers and asset managers to ensure these scenarios are rolled out effectively within their organisations. Together with our work on this year’s insurance survey, these initiatives will provide a basis for our future assessments of the system-wide exposure to climate risks. The third and final area is return A new horizon brings new opportunities. The IEA estimates that the low-carbon transition could require $ in energy sector investments every year for decades – twice the rate at present. Under their scenario, in order for carbon to stabilise by 2050, nearly 95% of electricity supply will need to be low carbon, 70% of new cars electric, and the CO2 intensity of the building sector will need to fall by 80%. With an estimated $ trillion of infrastructure investment expected between 2015 and 2030, smart decisions now can make sure that investment is both financially rewarding and environmentally sustainable.

This year, it appears that wage increases will be especially high in the public sector and in parts of the private service sector. Although it is too early to draw final conclusions, there are some indications that wage formation in Norway is changing: •  The social partners do not appear to be placing as much emphasis as previously on developments in wage growth among our trading partners. •  There are also signs that the social partners may be placing less emphasis on the impact on total unemployment when negotiating wages. •  Some features of this year’s wage settlement point to a somewhat greater degree of decentralisation in wage formation. An example of this is the municipal sector, where the Federation of Professional Associations will, as from this year, hold local negotiations on pay increases. On the other hand, centrally negotiated pay increases were very high this year. •  In public sector wage settlements, little emphasis appears to have been placed on the assumptions concerning wage growth on which government allocations are based. This has a negative impact on service production in many areas of the public sector. The experience of this year’s wage settlement also indicates that profitability in the internationally exposed sector has been given less emphasis in wage negotiations than earlier. A shortage of labour in more sheltered industries may thus have a greater influence than previously on overall wage growth. Inflation would then be determined by domestic factors to a greater extent than in the past.