samchain/econo-pairs-v1 huggingface dataset:
21 However, there are some leading indicators that point to a modest pick up over coming quarters. For example, job-to-job flows have been increasing (Chart 11) and some surveys of pay growth have picked up more sharply in the last year. Although the relationship between these surveys and average wage growth has become less robust in recent years (Chart 12), they do offer encouraging evidence of better wage prospects for those changing or finding new jobs. Of course, the pay of existing employees needs to pick up as well. After all, what matters for economy-wide inflation is the average wage relative to economy-wide productivity. 22 To that end, we will be closely monitoring pay settlements that are bunched around the turn of the year and taking a steer from the pay of new hires as a potential leading indicator of broader pay pressures. Some observers have discounted the implications for inflation of the recent weakness of pay growth because it stems from the types of jobs being filled – a “compositional effect”. However, these are real jobs being performed by real people, and an increase in lowerskilled lower-wage jobs is one consequence of working-off the labour supply shock. We also  20  See Broadbent (2014). 21  According to the ONS AWE measure, pay excluding bonuses for employees in the economy as a whole was 0.6% higher than a year earlier. Including bonuses, pay growth was –0.2%. In the private sector, the equivalent figures were 0.9% (excluding bonuses) and –0.1% (including bonuses).

Much of the fall in the unemployment rate is the result of workers in their prime leaving the labour force. 2, 3  1  See, for example, Acemoglu, D and Autor, D (2011), “Skills, tasks and technologies: implications for employment and earnings”, Handbook of Labor Economics, Volume 4b, Elsevier. 2  See Yellen, J (2014), “Labor market dynamics and monetary policy”, Remarks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole. In addition, Erceg and Levin (2013) show that there was a reduction in US participation rates of around 2½% between 2007–12. Of that, rates fell most markedly among the young (reflecting higher educational enrolment) and ‘prime age’ adults 25–54 years old. There was a sharp up-tick in older workers claiming forms of social insurance; but that was partly offset by higher participation rates among older workers, perhaps reflecting a need to offset lost retirement income. Erceg, C and Levin, A (2013), “Labour force participation and monetary policy in the wake of the Great Recession”, IMF Working Paper No. 13/245, July. 3  The 3pp fall in the participation rate is a marked break from its stable level in the preceding decade. Overall participation was flat at around 66% between 2004–7. It had fallen to below 63% in early 2014 (Bureau of Labour Statistics). By contrast, before that, and over the longer run, participation rates had been essentially acyclical – invariant to business cycle conditions (Erceg and Levin, 2013).
If oil prices were to fall again, a number of off-shore investment projects would become unprofitable, with considerable spillover effects on other sectors of our economy. Unemployment in Norway would probably rise. We cannot eliminate that risk. Curbing the exploitation of oil and gas resources is not a feasible alternative. The abiding question is rather how to limit the vulnerability associated with increased oil dependence. The fiscal rule for petroleum revenue spending is an important buffer. The petroleum fund mechanism and moderate and predictable spending of petroleum revenues over the central government budget contributes to enhancing economic stability. Reserves accumulated in the Government Pension Fund Global provide fiscal leeway in the event of an economic setback, as observed in 2008 and 2009. By limiting petroleum revenue spending to the expected real return on the Fund, we ensure that our petroleum wealth will benefit future generations. A balanced approach to revenue spending will allow future generations to benefit from what is spent on public investments domestically. Chart 8  8  BIS central bankers’ speeches  The spending of petroleum revenues also has another facet. It increases the cost of Norwegian labour. During upturns Norwegian companies have fared well, in spite of rapidly rising costs, thanks to efficiency gains and rising producer prices. Some other countries in Europe allowed costs to rise at broadly the same pace over a number of years. Now these countries are in a downturn with a high level of spare capacity, and with a need to improve competitiveness.

Close to 60 percent of the capital in the Government Pension Fund Global – Norway’s sovereign wealth fund – is invested in global equity markets. In times of good growth in the global economy and when optimism is on the rise, the return on the Fund increases. Conversely, turbulence and low risk willingness in the market have a negative effect on the Fund’s assets. This is a risk we have to live with to achieve solid returns over time. Because of the Fund’s long-term horizon, short-term risk tolerance is high. We can exploit this by engaging in countercyclical investment. The Fund’s size also allows us to reduce risk by spreading our investments across many countries. Norway has become a global financial investor. Through the Fund’s investments, Norway increasingly takes part in value added generated in other countries. Over the past hundred years, growing global trade and cross-border flows of capital and labour have been important factors driving economic progress. At times, the principles of free trade and capital movements have been set out of play. Walls have been raised between countries in the form of trade barriers and restrictions on capital flows. This has not been successful. Countries that have attempted to shield their economies from the rest of the world have fallen back into stagnation. Growing signs of increased protectionism are again causing concern. If this tendency intensifies, international trade and prosperity will be undermined. With its open economy, Norway would be severely affected.
For the past three decades, Islamic finance in Malaysia has undergone a journey that is marked with various significant milestones. I would like to highlight three major achievements of the industry in term of its development since inception. Firstly, Islamic finance in the country has become a key segment in the financial system. What was once a novelty is now mainstream. This is a consequence of continuous initiatives to build a solid foundation, focusing on infrastructural, institutional and capacity building measures, as well as robust regulatory and supervisory framework. These measures are the cornerstones of Islamic finance industry’s growth. From less than four Islamic banks and takaful players before year 2000, there are now 27 players that offer over 100 financial products beyond the basic financial offerings. The industry is characterised by increasing competitiveness and innovation. The recently launched Investment Account Platform (IAP) is the latest initiative where the industry has cooperated to further enhance the offerings of Islamic banks. The IAP provides an online marketplace to match potential investors with viable ventures. Islamic banking assets have also grown beyond the targeted 20% as originally intended in Bank Negara Malaysia’s Financial Sector Masterplan. It now stands at more than a quarter (27%) of the total banking system. Islamic finance also provides financing to all segments of society irrespective of beliefs, race and gender. There is also greater acceptance of takaful with its increased penetration rate to 14.8% of the population.

5  BIS Review 98/2000  The inflation target is necessary Transparency stimulates debate both about the monetary policy strategy we have adopted and about the way in which the Riksbank carries it out. We have recently been criticised for not slavishly complying with the simple decision-making rule that I have just described. However, debate has also taken place on the suitability of having an inflation target as a guide for monetary policy. The alternative would be a monetary policy based on discretionary decisions resting on assessments of the monetary policy that would best favour long-term stable growth. As will be evident from what I have said, while monetary policy is guided by a simple decision-making rule, the rule serves as a guide and not a straitjacket. We can depart from the rule if we make the assessment that the costs of complying with it will lead to unnecessary fluctuations in output and employment provided that inflation expectations and the credibility of monetary policy are not affected. Monetary policy decision-makers are always confronted to some extent by having to strike a balance between price stability and output variability in the short term. The balances must be struck so as to maintain confidence in price stability. It is easy to see that a central bank with a good reputation and many years of successful combating of inflation has more freedom than a central bank in a country with many years of negative experiences of high inflation.
Global imbalances laid the foundations for the current crisis If we now move on to the current global financial crisis we can see that there are both similarities and differences compared to the Swedish bank crisis of the 1990s. The circumstances that formed the background to the outbreak of the current crisis in the summer of 2007 included the considerable global imbalances that had developed, with an enduring savings surplus in some countries and deficits in others. The surplus was invested on the global financial markets and the substantial capital flows there helped to push down interest rates. As a result, demand and prices on many asset markets around the world increased explosively and there was a general fall in the premiums for credit risk. The explosion in asset prices was fuelled by a rapid expansion in credit. Money was lent more carelessly than previously. Housing bubbles developed in several parts of the world. In the USA, the development of such bubbles was reinforced by the inadequate regulation of the mortgage market and a political agenda that aimed to promote house ownership among people on low incomes. The search for yield drove investors to borrow more in order to achieve greater leverage in their investments. Financial innovations also helped to drive this development. A steady flow of new and increasingly complex instruments were created to satisfy the demand for investments with a higher yield.

The first is to make the size of the arrangement larger and more meaningful with respect to possible needs of members. The second is the simplicity of the activation process, especially for the first tranche. This is important for giving assurance to participating members that liquidity will be made available in a timely manner. And the third is the objective of turning CMI into a multilateral facility at a later stage. This last feature, if realized, will provide the region with its own financial arrangement that can help expand the region’s capability in safeguarding financial stability. lt goes without saying that a move to emphasize greater resource commitment by members will entail substantial strengthening in the current regional surveillance process. This is a development that we all should welcome. Strengthening the surveillance process should in fact be a key prior condition for expanding the CMI because it will help make the CMI process credible while reducing the risk of moral hazard. CMI is currently under review. I hope some of the points I have touched upon will be further explored. But whatever the outcome of the review may be, I am confident that it will signify another important step forward for regional financial cooperation. My second thought is on the region’s bond market. Economists in the region have long made known their views that Asia is a region with surplus savings, but the financial surplus of Asia has not been effectively utilize for the benefits of the economies in Asia. This is clearly a missed opportunity.
As can be seen from Chart 2, inflation climbed rapidly from below 2 per cent in 1997 and 1998 to a peak of 9.4 per cent in January 2002. At the same time the short and medium term growth prospects of the economy deteriorated. Facing conflicting demands, from the inflationary pressures stemming from a weakening currency on one hand and the outlook for a slowing economy on the other hand, the Central Bank opted to lower interest rates by ½ percentage point when the new monetary framework was announced. But that cut was made from a very high level as the policy rate had peaked at 11.4 per cent. The Central Bank kept a tight monetary stance until the spring of 2002, when it was clear that inflation would decline. Within less than one year, inflation was reduced from nearly 10 per cent to the target of 2½ per cent, and even below it for a while. Furthermore, the current account deficit disappeared in a matter of two years, partly due to the depreciation of the króna. This turnaround was much more rapid than might have been expected and is almost unparalleled among the developed countries. The economy is currently in a relatively good balance. But once you are in calm waters new challenges usually emerge. Ahead are new investments in the aluminium sector and related power plants, that will commence in 2003 and most likely continue until 2010.

Their take is that independent central banks are merely a troublesome relict and that monetary policy should largely be determined by the government’s financing needs. But experience from throughout history shows that this would, sooner or later, end in an economic policy fiasco. As you can see, the positions are far apart, with diametrically opposed interpretations of facts. The aim of my speech is to provide some clarity from the perspective of Switzerland’s central bank. To this end, I will set out some fundamental thoughts on the properties of sound money and the various types of money. I will then address the question as to whether, against the backdrop of our current monetary policy, the Swiss franc can still be described as sound money. Page 2/8  Sound money is stable money But let us first take a step back and look at money as a concept. Money is a generally accepted medium of exchange, and performs two other important functions, namely as a unit of account and as a store of value. As a unit of account, money serves to make economic transactions comparable. In this function, it is also used for representing the nominal value of all kinds of claims and liabilities. As a unit of account for determining value, money plays a prominent role in virtually all walks of life – from the workplace to healthcare and pension provision.
21 We can imagine the scale of possible savings if we consider the data published by the United Arab Emirates, which read that 45,000 transactions monthly are executed online only in Dubai, whose population slightly exceeds one million. 22 The benefits of e-administration development can also be demonstrated in financial terms — it has been estimated that companies in the European Union save approx. 10 euro under VAT on each online transaction 23 , whereas the research conducted for Trade-Net in Singapore shows that time of issuing the commercial permits online, reduced to one minute, has enabled business people to save approx. 1bn US dollars. 24 The more revolutionary the services are, the more advanced the technology and the greater back office integration of databases are. Without going into technical details, it means that enhanced quality of public services coincides with the increased risk related to the protection of privacy and commercial information. There is no doubt that confidence of the society is a key element of e-administration development because it has a significant role in determining the demand of citizens and business community for e-administration services. Lapses and mistakes made in the past by administration authorities in various parts of the world prove that upon designing and implementation of eadministration solutions, the safety of data and information as well as the ability to ensure privacy must be among the issues of top priority. In some countries, they have actually been incorporated in the vision of e-administration development.

(2) Includes the United States, Japan, the United Kingdom and the Eurozone. (3) Includes Australia, Canada, Norway and New Zealand. Source: Central Bank of Chile based on data from CEIC and the International Monetary Fund. Figure 10 Long term indebtedness and financial burden (percentage of disposable income) 80  18  70  15  60  12  50  9  40  6  30  3  20  0  Jun.02  Jun.03  Jun.04  Jun.05  Jun.06  Indebtedness  Jun.07  Jun.08  Jun.09  Financial burden  Source: Central Bank of Chile based on information from SBIF, SVS, SuSeSo. BIS Review 9/2010  11  Figure 11 National employment and unemployment rate (seasonally-adjusted series, percent)  3  12  2  10  1  8  0  6  -1  4  -2  2  97  99  01  03  05  Quarterly change in employment  07  09  Unemployment rate  Sources: Central Bank of Chile and National Statistics Bureau (INE).
Make use of this communication for constructing preferential cooperation. This path will create to you the opportunity to find and promote appropriate financing instruments and possibilities to overcome difficulties of the moment and guarantee the future of this important branch of business. Foreign currency income growth from all possible sources is translated into increase of macroeconomic stability in general and of financial stability in particular for the Albanian economy. At present, the geographic, demographic, economic and social characteristics of the Albanian economy present advantages, which if wisely utilized, may be materialised into economic benefits. Therefore, export sector constitutes an important source of profit and of foreign currency flows for financial intermediation in foreign currency. From this viewpoint, the support of exporters by the financial sector, not only with products and financial resources but also with financial consultancy, is an activity of mutual benefit. For this reason, I deem that the role of the banking system may be one of the main promoters to absorb some of advantages generated by the current international situation. Availing myself of the presence of banking system participants, I would like to address an institutional appeal to them: Assess more prudentially the role and potentials of this industry, stand by it with advice and financial consultancy, review your policies on commissions applied to it and in this process, give priority to a larger funding for it.

Further development of this framework promises to support financial and macroeconomic stability, within an overall strategy focused on achievement of our primary objective: price stability. Such considerations, in concert with the development of a new framework for macroprudential oversight, should permit to reduce the frequency, duration and economic impact of financial crises. These are themes that will be discussed in depth in the course of today’s colloquium. We have to make sure that the global financial system, as well as continental and national ones, are made much more resilient. Yet, it would be unrealistic to believe that financial crises can be eliminated. Recent experience has also demonstrated the need for central banks to be timely and agile in managing financial crises without ever – in any circumstances – losing their sense of the medium to long-term orientation to price stability. As regards the ECB, in the face of financial crisis, monetary policy was eased significantly through conventional means in late 2008 and early 2009, with key interest rates being reduced significantly. Moreover, non-standard measures, in the form of the ECB’s enhanced credit support were introduced. These aimed at maintaining an efficient transmission of monetary policy by supporting market functioning. Such measures were instrumental in the maintenance of price stability, since, in the face of downside risks to price stability, they ensured that the easing of the monetary policy stance was transmitted into a broader easing of financing conditions.
Shocks of various kinds will mean that inflation will often deviate from the target and the MPC is required to take action to bring inflation back to the target. But it will do so gradually, if to do otherwise would have damaging consequences for employment or output. By looking ahead and aiming to bring inflation back on track over a horizon of two years or so, the MPC should be able to avoid undesirable volatility of employment and output. That is part of our remit. Conclusions Let me briefly draw two conclusions from my analysis tonight. First, the concept of a natural rate of unemployment, and the existence of a vertical long-run Phillips curve, are crucial to the framework of monetary policy. They help us focus on levels of output and employment rather than simply their growth rates. They also mean that there may be times when, although a rise in unemployment is undesirable, it is unavoidable. But the natural rate is of much less help in operational decisions on interest rates made month by month. This is because the natural rate is determined by microeconomic structural factors that are not easy to observe, and which are likely to change over time, and may not bear any close relationship to inflationary pressures in the short run. More easily observable in terms of its relationship to inflation and unemployment is the concept of the NAIRU.

In contrast, the NAIRU will vary both with changes in the natural rate and in response to macroeconomic shocks. So those who argue that estimates of the NAIRU are too time-varying to be plausible are, I think, in danger of missing the point. The NAIRU can be used as an ex-post device to describe the level of unemployment at which inflation started (or would have started) to increase. But the usefulness of these estimates as an ex-ante predictor of future inflationary pressure depends critically upon the economic environment. In particular, for estimates of the NAIRU to be a good predictor of future inflation, the natural rate would need to be relatively stable, and the magnitude of likely shocks would need to be small. This perhaps goes some way to explaining why estimates of the NAIRU in the recent past have appeared to contain more ex-ante information about future inflation in the US than they have in Europe. More fundamentally, the distinction between the natural rate and the NAIRU illustrates the difficulty of using those concepts for the month-to-month implementation of monetary policy. The natural rate, although clearly relevant to the dynamics of inflation, is not sufficient to explain changes in the inflation rate. The NAIRU, which is defined to be a measure related to short-run inflationary pressures, requires knowledge of the reduced form of the transmission mechanism and the history of shocks to the economy.