samchain/econo-pairs-v1 huggingface dataset:
Together with the Secretary of State for Economic Affairs, I am participating in Financial Security Board (FSB) discussions to radically reform the financial systems of all countries. Both of us have had the privilege to witness how Spanish banking regulation and supervision is being carefully appraised and, insofar as is possible, it is intended to take advantage of the good work done in the past in Spain. We in Spain should take this same attitude to learning. We should recognise that we have failed in labour regulation since, for the third time in recent decades, unemployment has approached the unacceptable figure of 20%. We should therefore find out what other countries are doing with their labour institutions and try to incorporate into Spanish legislation whatever seems most reasonable to achieve their low unemployment rates and their high labour productivity levels. Unfortunately, we are at a historic crossroads. If we do not undertake ambitious labour reform, the Spanish economy will enter a tough and complicated period, in which not only will growth be lower than it would be with extensive reform, but, moreover, its impact on public finances will be extremely negative, making it difficult to achieve the targets set in the Stability Plan.

We were offering overnight repos of up to $ trillion, as well as substantial amounts of term repos of longer maturities.2 The sizeable offerings were designed to meet the markets’ needs and provide confidence that liquidity would be available. At their peak in mid-March of 2020, our repo operations reached nearly $ billion. But repos alone were not enough to restore smooth market functioning. The FOMC also directed the Open Market Trading Desk at the New York Fed to engage in large-scale purchases of Treasury securities and agency mortgage-backed securities (MBS) to support smooth functioning of those markets. The pace and amount of asset purchases during this period was unmatched. During the worst of the crisis last year, the Federal Reserve was purchasing more than $ billion of Treasuries per week, which was more than the Treasury purchases in the entire first round of quantitative easing in response to the Global Financial Crisis. And in the three months starting in the middle of March, the Federal Reserve purchased more than $ trillion of Treasury and agency MBS combined. These actions, along with prompt fiscal measures enacted by Congress and emergency steps taken by the Federal Reserve and other government agencies, ultimately proved successful at restoring functioning in the Treasury and other financial markets. Together, these measures averted what could have been a severe financial crisis that would have had devasting effects on the economy. But they are also a stark reminder that these markets are not nearly as resilient as they should be.
Alan Krueger, Judd Cramer and David Cho, among others, have shown that the relationship during this cycle between real wages and the short-term unemployment rate – that is, those unemployed 26 weeks or less – has been in line with historical norms, whereas the huge  7  The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. 8  The hiring rate stood at 4.0 percent at its 2006 peak and fell to as low as 2.8 percent in 2009. Today, it is 3.5 percent. 9  See Dice Hiring Indicators (2014). 10  Daly and Hobijn (2014). 11  See National Association for Business Economics (2014b). 4  BIS central bankers’ speeches  spike in long-term unemployment exerted minimal pressure on real wage growth. 12 Of course, the short-term unemployment rate is now close to its pre-recession level. So their model implies nominal wage growth should be returning to something close to the fundamentals implied by productivity growth and inflation. My staff’s research comes to a somewhat different conclusion. Using state-level data, they show that if you further split short-term unemployment into those unemployed one month or less and those unemployed between one and six months, only the one-to-six month rate has any predictive power for wage growth. This so-called medium-term unemployment rate is still somewhat above its pre-recession mark.

Many economists, our Chicago Fed staff included, have been working long and hard on research related to this topic. In my remarks today, I will briefly talk about some of our results that touch on several of the most contested labor market issues on the table today. These involve labor force participation, job openings and wages. To give you the punch line, this research and work done by others in the field lead me to conclude that, although we have made great strides, a good deal of slack remains in the labor market. Labor force participation and employment As everyone in this room is aware, the labor force participation rate has fallen throughout the recession and recovery and is now at a 35-year low. 2 Much of that decline is due to trends that far predate the Great Recession. The movement of baby boomers into retirement age and the long-running declines in teenager and prime-age male participation would have significantly reduced labor force participation rates independently of the economic downturn. 1  See Yellen (2014). 2  The labor force participation rate is defined as the share of the population aged 16 and older who are either employed or unemployed. To be unemployed, a person has to not have a job but be actively looking for work in the prior four weeks and to be currently available to work. These data are collected by the U.S. Bureau of Labor Statistics as part of its monthly Current Population Survey.
Another transmission channel of the global crisis has been the effect on domestic financial markets of the deteriorated financial conditions in developed economies together with the increase in the global risk perception. Despite reduced stress in the past several months, the world financial environment continues to cause concern. Still, conditions facing Chilean banks and firms to access external credit sources are more favorable than for other emerging economies, no sudden stop has occurred in external inflows, while the local bond market has taken a significant impulse. Chile’s foreign financing needs have been met easily, and the reduction in the current account deficit has lessened future requirements. Absence of tensions in this setting is reflected in the Chilean sovereign risk trend, in our country’s credit rating upgrade applied a few months back, and in the foreign currency interest rates in the domestic market. In addition, the change in risk perception and global financial conditions triggered a tightening of domestic lending standards, which has been offset by measures of monetary policy and liquidity provision. The interest rate cut applied by the banks has been evident, reflecting in consumer and commercial loan rates now hundreds of basis points below their peak in late 2008. Mortgage rates, meanwhile, have also declined, although somewhat less (Figure 6).

11.05.2023  The financial system: current situation and challenges IE University – Banco de España – Federal Reserve Bank of Saint Louis Conference: Current Challenges in Economics & Finance Madrid Pablo Hernández de Cos Governor  Thank you very much to the organisers for inviting me to this conference. Today, I will be addressing you in my capacity as Chair of the Advisory Technical Committee of the European Systemic Risk Board (ESRB),1 a role which brings a deep EU-oriented perspective, complementary to my regular responsibilities as Governor of the Banco de España and member of the Governing Council of the European Central Bank. The macrofinancial risk landscape and the banking sector The macrofinancial risk landscape has changed in recent months and continues to evolve. In a relatively short period of time we have moved from low inflation and low interest rates to persistent high inflation and rising interest rates. This shift poses new and enhanced risks to financial stability. To heighten awareness of these risks the ESRB adopted a Warning2 on vulnerabilities in the EU financial system in September 2022. This is the first general warning (i.e. addressed to all EU Member States) that has been issued by the ESRB since its establishment in 2010. Over the last seven months some economic developments have surprised to the upside, while some vulnerabilities timely identified in the Warning have come to the fore.
However, in terms of seeking investment returns, Asian insurers are operating within similar market trends as their global counterparts. To illustrate, long-term government bond yields in the US and Euro area have declined an average of 200 to 300 bps compared to the 10-year average prevailing before the Global Financial Crisis. In Asia, long-term government bond yields are, on average, 50 to 300bps lower than pre-crisis levels. Asian insurers also have to face increasing costs of capital4, compounding the pressure to generate higher returns. 10. Addressing the duration mismatch between assets and liabilities has been a persistent challenge for insurers in Asia, due to a shortage of long-dated instruments as well as restrictions on investments in some jurisdictions. A number of governments in Asia, including Korea, Taiwan, China and Singapore, have responded by issuing long-dated bonds; and easing restrictions on specific assets classes that insurers can hold. Notwithstanding this, the supply of high quality government and corporate bonds remains limited relative to the strong demand from a wide spectrum of investors for these “safe haven” assets, such that insurers can be crowded out. Regulatory reforms 11. Finally, let me touch on the oncoming regulatory reforms, such as Solvency II, which will also play a significant role in shaping insurers’ investment strategies. Almost 80% of the respondents to a recent Goldman Sachs survey listed regulatory capital treatment as the predominant non-market related concern. 12. Insurance regulatory reforms are converging towards a principles-based and fair value approach for the total balance sheet.

The share of income received by the top 1 per cent of the population has also risen since the 1980s across many industrialised countries, including Australia, Canada, the United Kingdom and the United States (Atkinson and Morelli, 2014). 5  See Autor, Katz and Krueger (1998) and Autor, Katz and Kearney (2008). For example the last 60 years have seen US returns to education rise despite a large increase in the supply of more educated workers. And there is evidence that increases in the employment of more skilled workers between the 1970s and the 1990s were greater in more computer intensive industries. BIS central bankers’ speeches  1  Now is the time to be famous or fortunate. There is also disturbing evidence that equality of opportunity has fallen, with the potential to reinforce cultural and economic divides. For example, social mobility has declined in the US undercutting the sense of fairness at the heart of American society. 7 Intergenerational equity is similarly strained across the advanced world. Social welfare systems designed and enjoyed by previous generations may prove, absent reform, unaffordable for future ones. 8 And environmental degradation remains unaddressed, a tragic embarrassment now seldom mentioned in either polite society or at the G20. To maintain the balance of an inclusive social contract, it is necessary to recognise the importance of values and beliefs in economic life.
BIS Review 14/2009  There are two primary factors 2 underlying the relative cost differences: 1)  the compensation investors require to hold a security that is less liquid than its nominal counterpart, termed the illiquidity premium, and  2)  the insurance value they attach to obtaining protection against inflation risk, known as the inflation risk premium. With regard to the first factor, when investors are worried about their ability to resell TIPS in a liquid secondary market, they require compensation for holding the securities compared with more liquid alternatives. This illiquidity premium tends to drive up TIPS yields and increase the Treasury’s borrowing costs. The second factor works in the opposite direction. To the extent that investors are willing to pay for inflation protection, they would purchase TIPS at a price above that implied by their expected payment stream. As such, inflation risk premiums result in lower expected borrowing costs for the government and savings for the TIPS program compared with nominal issuance. To determine which factor has been historically dominant, we conduct an ex-ante cost analysis: We compare the amount that the Treasury received for inflation compensation at auction with an observable measure of the inflation expectations of TIPS investors that is not contaminated by premiums for inflation risk or liquidity differentials. Unfortunately, we don’t have a perfect measure of expected inflation. Nevertheless, we may be able to get close.

We will remain committed and we are making every effort to ensure that this high inflation ceases to be a problem for our country and that it is brought down to 3% within the policy horizon. Thank you. 8  Figure 1  Inflation indicators (1) (2)  Core inflation of goods and services (1) (2)  (annual change, percent)  (annual change, percent)  25  20  CPI Core CPI (w/o volatiles) CPI volatiles  20  Core services (w/o volatiles) Core goods (w/o volatiles)  15  15 10 10 5  5  0  0 18  19  20  21  22  18  23  20  19  21  22  23  (1) Dashed vertical line marks statistical cutoff of March 2023 MP Report. (2) For details on the different groupings and their shares in the total CPI basket, see box IV.1 in December 2019 MP Report, Carlomagno and Sansone (2019) and Economic Glossary. Sources: Central Bank of Chile and National Statistics Institute.
However, owing to the effects of tax hikes, increases in food and energy prices, and base effects, the inflation rate is hovering significantly above the target, which is having an adverse impact on inflation expectations, and leading to risks regarding pricing behavior. Therefore, the revised forecasts are based on the assumption of gradually withdrawing the excessive amount of liquidity provided to the market, and increasing policy rates at a measured pace starting in the last quarter of 2010. However, based on the prediction that resource utilization will likely remain at low levels for sometime, the baseline  scenario envisages that the increases in interest rates would be limited with policy rates remaining at single-digit levels throughout the forecast horizon. As shown in the slide, inflation will follow a volatile path throughout 2010 owing to the base effects driven by the temporary tax cuts and unprocessed food price fluctuations that occurred during 2009 (Figure 34). The temporary tax cuts implemented in March 2009, which were withdrawn partly in June and fully in October, would cause headline inflation to increase during March and April, and to decrease during June, July and October of 2010. Accordingly, inflation is expected to increase slightly during the second quarter and then fluctuate at around 10 percent in the third quarter (Figure 34). Inflation is expected to drop significantly in the last quarter of 2010 and the first quarter of 2011 (Figure 34).

The Riksbank’s annual dividends to the government have been SEK 5 billion on average over the past five years. This is a considerable sum, albeit small in relation to total tax revenues. Second, the Riksbank, like other central banks, needs to have a balance sheet that does not undermine its financial independence. 6 Central banks differ from other banks and companies, of course, in that they can always create new money to fund their expenditure and because they are not subject to normal bankruptcy legislation. 4 Alsterlind et al. (2015) describe how bond purchases can affect interest rates via several different mechanisms. 5 See De Rezende, Kjellberg and Tysklind (2015) and De Rezende (2016). 6 A detailed review of the research and discussion of the view of central banks’ finances can be found in Archer  and Moser-Boehm (2013). Stella and Lönnberg (2008), Del Negro and Sims (2015) and Sims (2016) discuss the importance of the balance sheet for the ability of central banks to pursue an effective monetary policy. See Ernhagen, Vesterlund and Viotti (2002) for Swedish perspectives. 3 [12]  But a central bank that is forced to create money in order to fund its expenditure cannot simultaneously pursue a monetary policy that safeguards price stability. Neither is it desirable for central banks to rely on funding from the government as there is then a risk of the funding being linked to conditions being put on the bank’s management or actions.
Accordingly, purchases are distributed evenly through the year. At the end of each month, Norges Bank announces the size of the daily purchases or sales of kroner for the coming month, based on estimates of oil revenues and fiscal spending. The amount can be interpreted as our best estimate for the remaining months of the year. The economic outlook Let me now turn to the outlook for the Norwegian economy. We are about to leave behind us 15 golden years. The Norwegian economy has made use of favourable tailwinds and seized the opportunities offered. The other side of the coin is an economy that has become increasingly dependent on oil, and thereby more vulnerable to changes in oil prices and petroleum revenues. And as we know, oil prices have fallen by nearly 50 percent since last summer. The vulnerability manifests itself in several ways. A large share of the business sector and the labour market is linked to the petroleum sector in Norway and in other countries. 1  2  Revenues received from the State’s Direct Financial Interest in the petroleum sector (SDFI). BIS central bankers’ speeches  Petroleum investment, which has long been an important driver of growth in the Norwegian economy, is now expected to fall in the years ahead. The fall in oil prices in recent months has accelerated and amplified an announced decline in the activity level on the Norwegian continental shelf. Lower oil prices reduce oil company cash flows and reduce the profitability of new investments.

There has been growing evidence that Green and ESG investments may not lead to a sacrifice in returns. On the contrary, some ESG investments could actually enhance long term sustainability and improve risk-adjusted returns for investors. As the manager for the Exchange Fund, the HKMA takes a long term view and sees Green and ESG investments as an important driver of value in the long term. In this connection, the guiding principle that the HKMA will adopt going forward is that priority can be given to ESG investments if the long term return is comparable to other investments on a risk-adjusted basis. More specifically, the HKMA has taken or will take the following measures to support Responsible Investment: ___ (a) we have already incorporated ESG factors in our credit risk analysis of bonds; we have required our external managers of the Hong Kong equity portfolios to comply (b) with the Principles of Responsible Ownership promulgated by the Securities and Futures Commission in 2016; we have invested two tranches of $ billion each in the Managed Co-lending Portfolio (c) Programme (MCPP) run by the IFC. A substantial part of the MCPP will target sustainable investments across emerging markets; (d) we will further grow our green bond portfolio, through direct investment or investment in green bond funds; (e) we will participate in ESG-themed public equities investments through external managers in passive or active mandates targeting ESG benchmark indices; and (f) we will accord green accreditation as a predominant factor in investment in buildings in our real estate portfolio.
As yet, there are few signs of a turnaround in the labour market and business tendency surveys indicate that the upturn in the private sector will be relatively weak this year. However, some improvement may be on the way, although it is difficult to determine exactly when the trend will turn. Recently, the number of new job vacancies registered has increased somewhat and the number of redundancy notices has declined. At the same time, the strained local government finances indicate a weak upturn in employment in this sector in the near future. The situation in the labour market has caused us to revise down our assessments of future wage cost increases. This was also included in the picture in February. The central wage agreements signed in the manufacturing and retail trade sectors have confirmed this development. Our new forecasts indicate wage cost increases of 3.5 per cent over the coming two years, which is slightly lower than in December. Last year there were increasing signs of more rapid productivity growth. While employment, measured as the number of hours worked in the business sector, developed weaker than anticipated, growth was largely as expected. This is reflected in more rapid productivity growth. We drew attention to this picture already in December. Since then, these developments have become clearer and been reinforced.

In my opinion, a good checklist for a policy-maker on monetary policy issues is what Donald L. Kohn at the Federal Reserve has put forward on several occasions. He considers that three conditions I mentioned earlier must be met before central banks “lean against the wind”. And these are the three arguments I mentioned earlier. The first condition is that it must be possible to identify a bubble sufficiently early and with sufficient certainty. Secondly, the assessment must be that there is a good chance that a slightly higher interest rate will really slow down the untenable developments. Finally, one must count on being able to gain “enough” by preventing a bubble in relation to what a tighter monetary policy might cost in the short term. I believe that most people will agree that these are sound conditions to use as a foundation. However, the views regarding when the conditions are actually met can vary. Professor Kohn’s first condition probably entails the greatest difficulty. Although we are constantly developing our forecasting methods and models and they are becoming increasingly sophisticated, I do not expect that we will be able to reach a stage in the foreseeable future where we can be entirely sure that something we assess as an incipient bubble actually is a bubble. This is largely due to the nature of things, or rather the nature of the bubble.