samchain/econo-pairs-v1 huggingface dataset:
The highest respect – coupled with a fair dose of nervousness – is also what I felt while sitting in the waiting room outside Ben’s office, having just arrived at Harvard as a young post-doc. I will never forget the moment when I first entered Ben’s office, with its traditional furniture and its walls packed with majestic books staring down at me. I could truly feel the vast amount of knowledge present in that room. Fortunately, Ben welcomed me warmly and my anxiety quickly dissipated. Indeed, I could not have hoped for a better mentor for my stay at Harvard. I have learned a great deal from Ben, not only as an economist, but also as a person. Benjamin Friedman is an unusual scholar in many respects. His research is extraordinarily broad and deep, as demonstrated by the topic of today’s lecture, namely the influence of religious thinking on economic thinking. Some of you may ask what this has to do with the Swiss National Bank. While people’s faith in the currency is an essential precondition for successful monetary policy, organising public lectures on religion may seem a little farfetched. However, allow me to reassure you that Ben has also published over 150 academic articles on monetary policy, macroeconomics and financial markets. He is therefore a most logical candidate to give the Karl Brunner Distinguished Lecture, even on a topic that may seem unusual at first sight.

Born in Louisville, Kentucky, Benjamin Friedman went to Harvard University with the intention of studying law, but soon realised that economics suited him better. He pursued his studies at Harvard and at Cambridge University in England. Early in his career, Ben worked for various entities of the Federal Reserve System and at Morgan Stanley. In 1972, at the age of 25, he was appointed assistant professor of economics at Harvard University. Ben has remained a loyal faculty member at Harvard for five decades, including a three-year spell as the chairman of the economics department. Page 2/4  When Ben recently celebrated 50 years as a professor at Harvard, many of his former students travelled from all around the world to attend the occasion. The interaction with his students has been of utmost importance to Ben, and he would remain in contact with them for decades following their graduation. A number of these former students today occupy leading positions in academia, central banking and government. This shows that Ben has been not only an outstanding researcher, but also an influential teacher of economics. Spending 50 years in the same place is not as unusual as one might think, at least not when we consider some of the great Enlightenment thinkers Ben so deeply admires. Take Immanuel Kant, who developed his philosophy without ever leaving his hometown of Königsberg. According to legend, Kant became such an integral part of the city that people would set their watch by the time he left his house for his afternoon walk.
The first phase began with the bankruptcy filing of Lehman Brothers in September 2008. Here the euro area shared in a global liquidity crunch that was largely imported from abroad. The second phase began in May 2010 with a sovereign crisis that was localised in the euro area, and that was partially exported to the world economy. This second phase was arguably the more pernicious for monetary union. The re-pricing of sovereign risk in the euro area spread from Greece to other vulnerable economies, and from sovereign to private debt and vice versa. In the process, the liquidity crunch morphed into a systemic crisis for the banking sectors of a number of member countries, and for the integrity of monetary union as a whole. The traditional exposure of banks in vulnerable countries to their own sovereign issuers became a quick carrier of  BIS central bankers’ speeches  1  financial contagion as their sovereign bond holdings depreciated and eroded their capital in the eyes of creditors. This adverse sovereign-bank feedback loop interacted with existing vulnerabilities. Countries with persistent competitiveness losses and associated large current account deficits – as was the case of Portugal – were particularly sensitive to a reversal in external financing. This was exacerbated by capital flight to core economies which started to deplete banks’ deposits in the most vulnerable countries.

In Portugal, real GDP has started its recovery path, fiscal developments have been positive and the unemployment rate has started to fall. And consumer and business confidence has been on an upward trend for many months. A similar improvement in confidence has also occurred in other countries that had been affected by the crisis. Expectations regarding incomes and employment are steadily being upgraded. This is a sign that households and firms are starting to internalise the benefits of the reforms implemented so far. Looking ahead, the task of all euro area policymakers is to ensure that the improvement in confidence will be validated by actual outcomes. If implementation of structural reforms is pursued ambitiously and the reform momentum upheld, it seems likely that growth will surprise on the upside in the coming years. 3  See Varga J., J. in’t Ved (2013), The growth impact of structural reforms, Quarterly Report on the Euro Area, European Commission Vol. 12/4, page 17–27. BIS central bankers’ speeches  7
That would hopefully be a positive side-effect, but the main purpose would be to rectify the problems with the CPI as a target variable which have gradually become more and more evident. Naturally, a change of target variable must be preceded by a thorough analysis of how and when the replacement would take place and what consequences it could potentially have. My aim here is simply to highlight the issue and initiate a discussion. Of course, a new target variable would not solve every problem and be the only measure the Riksbank would have to look at. We would need to continue to analyse different measures of inflation to get as complete a picture as possible. For instance, as oil prices, and energy prices in general, often vary greatly, there are reasons on many occasions to study inflation measures where these prices are excluded. However, I believe the biggest problem would still be solved if interest expenditure were excluded from the target variable once and for all. Before I continue, I would like to make a comment about the target variable in relation to wage formation. This is connected to my assertion that the significance of interest expenditure for the CPI means that an extremely low rate of increase in CPI inflation tends to be followed sooner or later by an unusually high rate of increase. As we have seen, these periods can also be fairly protracted.

If wage formation places a lot of focus on the current level of CPI inflation, I see a risk that this could create instability in the wage formation system. A situation similar to the one in the 1970s and 80s could then ultimately occur, whereby wage developments varied substantially from year to year depending on the current inflation rate, which also varied extensively. It would therefore be better if wage formation were based on a less volatile inflation measure than CPI inflation.13 A new monetary policy target variable could hopefully take on that role. A band surrounding the target When the General Council of the Riksbank decided to introduce an inflation target of 2 per cent in January 1993, it also decided that there should be a tolerance band surrounding this target of 1 percentage point both above and below.14 The aim was to clarify that the Riksbank does not have the ability to control inflation exactly in the short term, but that it also aims to limit deviations from the target – that it does not intend to “tolerate” deviations greater than 1 percentage point. The size of the interval was determined by what intuitively appeared to be reasonable. It was not possible to rely on any past experience as the monetary policy regime was entirely new and inflation had varied considerably during the old regime which had a fixed exchange rate. The Riksbank expected that inflation would now vary less, but was unsure as to how much.
Krzysztof Rybiński: How to use globalization to improve Poles’ living standards? Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the panel session: Globalization and Poland’s development, 4th Congress of the Polish Lisbon Strategy Forum, Warsaw, 13 October 2006. *  *  *  Ladies and Gentlemen, In my today's speech, I should like to achieve two goals: •  First of all, I would like to outline major economic changes effected by globalization. 1  •  Second, I would like to point out to such areas in Poland's economic strategy that call for profound changes necessary if we want to reap the benefits of globalization while avoiding its pitfalls. At the same time, I would like to emphasize, as I usually do, that the opinions presented in this speech reflect my personal views and by no means are an official stance taken by any institution I used to be or I am presently professionally involved with. * (1)  *  *  What major changes in the global economy and in national economies have been induced by globalization? Globalization may be defined in various ways, and I believe that its essence is best captured when we define it as free movement of goods, services, labour, capital and knowledge between countries. Before I proceed with the presentation of the most important effects of globalization, it is well worth recalling the demographic trends that are going to strongly influence the global economy.

Ladies and gentlemen, The second challenge is in forging strong collaboration and cooperation among key stakeholders and overcoming the collective action problem. When it comes to costly and difficult action, we always prefer others to do it. Ministries, government agencies, policymakers and regulators must therefore set aside their differences and work for the greater good, consolidate their strength based on their shared values and work collaboratively to develop and bring creative ideas for sustainable development into fruition. Initiatives need to be driven beyond personal motivation and belief. Strategies need clear milestones with clear accountability by stakeholders. Sector-specific approaches need to converge to limit risks of a disorderly transition. The journey of sustainability is therefore one that is best navigated collectively. We have to come together to support joint and coordinated responses to mitigate unsustainable practices. For the Malaysian financial sector, the formation of the Joint Committee on Climate Change was an important milestone in pursuing collaborative actions for building climate resilience. A key mandate of the Joint Committee is to facilitate collaboration between key stakeholders in advancing coordinated solutions to address arising challenges and issues. This is in addition to building industry capacity, and identifying issues, challenges and priorities facing the financial sector in managing the transition towards a low carbon economy. The third challenge that we face as a developing nation is in balancing sustainability and competing socio-economic priorities, given our limited resources for transition to low-carbon economy.
The interest rate decline can be ascribed to a number of factors. In late autumn 2002, inflation started to fall. The inflation projections were also revised down. New information gradually emerged about the outlook for other countries and the Norwegian economy, indicating that inflation might be very low. Short-term real interest rates have fallen by close to 4 percentage points. It would seem that it is not only changes in the real interest rate that have an influence, but also its level. Between December 2002 and March 2004, the interest rate has moved from a high to a low level. The real interest rate is now lower than a neutral real interest rate. A real interest rate that is lower than the neutral rate will stimulate activity even after the effects of the interest rate fall itself have been exhausted. Calculations seem to indicate that the neutral real interest rate for Norway is between 2½ and 3½ per cent, and it has probably fallen somewhat in recent years. It takes time for an interest rate reduction to have an impact on inflation. We are now seeing the effects of previous monetary policy decisions, some of which were taken two years ago. The interest rate has affected inflation via the krone exchange rate and via demand for goods and services. In particular, the rise in prices for domestically produced goods and services has picked up.

Inflation targeting has gradually become the standard monetary policy regime in developed economies. In Norway, the Government introduced an inflation target in 2001. The target is set at 2.5 per cent. The various components of economic policy in Norway have varying effects. This is why they have different functions: •  Monetary policy steers inflation in the medium and long term and can also contribute to smoothing swings in output and employment. •  The central government budget – growth in public expenditure – influences the krone and the size of the internationally exposed business sector in the medium term. Government expenditure and revenues must be in balance in the long term. •  Wage formation, the structure of the economy and incentives determine how well and how efficiently we utilise our labour resources and other economic resources. There is also an interaction: •  In its budget resolutions, the government authorities will attach importance to the effects of the budget on the Norwegian economy and will therefore take account of interest rate effects. In this way, they avoid a situation where growth in public expenditure and the interest rate push the economy in different directions. •  With a known monetary policy response pattern, the parties to the centralised income settlements can take interest rate effects into account when wage increases are negotiated. •  Moreover, the parties to public sector negotiations can take into account that the higher pay increases are, the fewer people that can be paid over government budgets.
François Villeroy de Galhau: The sustainability of European Monetary Union and institutional reform Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at The ECB and Its Watchers XIX Conference, organised by the Institute for Monetary and Financial Stability, Frankfurt am Main, 14 March 2018. * * * Accompanying slides. Ladies and Gentlemen, In order to make the European Monetary Union sustainable in the medium term, we have to make it more resilient to future crises. The current economic cycle is admittedly in a very robust phase today, but this will come to an end at some point. If we do not want to overburden monetary policy during the next recession, we need to strengthen our Economic Union. These objectives should be, including here in Germany, two sides of the same coin. To ensure monetary policy does not remain “the only game in town”, we have to arm ourselves with stronger economic instruments at the European level. There is a serious risk, however, of missed opportunities as the present debate over the future of the euro area seems to be getting bogged down in neverending arguments such as on the European Deposit Insurance Scheme (EDIS) or sovereign debt restructuring. We should rather focus our efforts on the many other proposals that are more consensual. In my remarks today, I will elaborate on the three old clichés that are paralysing the debate and that we must put behind us to move forward in the euro area.

The Riksbank conducted a study in 2007 with the aim of investigating how large a proportion of the cash in circulation could be explained on the basis of what we know about cash usage.2 The study was based on available statistics on retail sales, secondary markets, liquidity buffers, lost or destroyed banknotes and coins and a number of other factors. Despite this we were unable to explain more than around 40 per cent of the value of the banknotes and coins in circulation. Although the study did not reach beyond 2004, I dare to claim that we still cannot explain what a large proportion of the cash is used for. Part of the explanation may be that the public has more  1  This comparison is based on cash usage measured as the value of the banknotes and coins in circulation (MO) in relation to GDP and on the number of card payments per person and year. 2  Guibourg, Gabriela and Björn Segendorff (2007). The Use of Cash and the Size of the Shadow Economy in Sweden. Sveriges Riksbank Working Paper Series, No. 204. 2  BIS central bankers’ speeches  cash at home, as a buffer, than we believe. Unfortunately, it is difficult to get good statistics on things like this as people may feel it is risky and sensitive to say how much cash they have at home. Another explanation is that cash is used in the shadow economy, for example for various household services such as repairs and cleaning.
5  Not included in these figures are significant pools of capital held in privately managed accounts run by hedge fund managers as well as capital managed by the proprietary desks of global investment banks. Though typically not formally structured around hedge fund vehicles, these assets closely mirror the investment activities of hedge funds. BIS Review 8/2005  1  Until the second half of the nineties, the hedge fund industry capital base was largely one of high net worth fortunes. Part of the acceleration of inflows throughout the second half of the nineties can be attributed to pension funds, endowments and other institutional investors who have begun to allocate small percentages of their asset base to hedge funds. More recently, funds of funds have become an important source of new inflows to the industry. The largest share of the industry’s total client base continues to be private wealthy individuals either as direct investors or through funds of funds. Industry flows data suggest, however, that assets from institutional investors have recently grown more rapidly than the overall industry asset base. A major factor contributing to the flows of new money into hedge funds has been the high relative rates of return (graph 2). The average return on the CSFB/Tremont hedge fund index over the past 10 years is 11%. Dividing the excess return over cash by the realized return volatility, hedge funds achieved a Sharpe ratio of 0.8.

Among the legal advances are greater clarity on the enforceability of rights of netting and closeout in the event of default of a counterparty, better clarity in master documentation regarding rights and remedies, and better harmonization domestically and internationally of key provisions in different  2  BIS Review 33/2004  master netting agreements for different products that might hedge one another. These, combined with the wider prevalence of collateral arrangements overall, provide derivatives dealers greater protection in the event of counterparty default and expand their capacity to enter into transactions under normal market conditions. The development of new clearing arrangements has also strengthened the resiliency of the crucial payment and settlement systems that provide the backbone of the U.S. financial system. Existing payment and settlement systems also have implemented improved safeguards not only against the impact of the default of a system participant, but also against the potential impact of external events, such as those experienced on September 11. Overall, these changes suggest that, at a fundamental level, significant strides have been made in enhancing the resiliency of the U.S. financial system. High levels of overall capital, greater diversification of credit exposure, increased use of collateral, and the stronger payment and settlement system infrastructure make our financial system stronger today than it has been. With these favorable developments, however, come a range of challenges. I want to discuss a few of these and their implications. This is not meant to be, and is not, a comprehensive list. The first is the challenge of complexity.
Moreover, the reform of regional financing arrangements should be tackled with the aim of aligning their revenue to a prior objective estimate of their expenditure needs, ensuring transparent distribution and increasing the degree of fiscal coresponsibility. 6. Conclusions I shall conclude insisting on the five attributes for the growth strategy which Spain, in my view, currently needs: it should be urgent, ambitious, comprehensive, assessable and based on broad consensus. Urgent, owing to the extraordinarily complex circumstances we face and to the scale of the challenges to be tackled. Inaction works against us, since a lack of response to these challenges raises the scale of their threat. Ambitious, because the complexity of the situation and the scale of the challenges require a broad raft of - in many cases disruptive - reforms, not minor, isolated adjustments. Comprehensive, because the different challenges conditioning the economy’s growth outlook and the well-being of our society are closely interrelated. Seeking to resolve any of them in isolation is neither feasible nor desirable. Moreover, the strategy should be regularly assessed, to identify areas where its design or application may be improved. Finally, it must be based on broad consensus, to infuse it with permanence and credibility. Structural challenges call for structural responses, that last over time. Therefore, in a democratic society like ours, the guiding principles of this strategy should enjoy a high degree of consensus across the various political, economic and social agents, so that the foundations underpinning our growth are stable. Thank you. 11

9 In March 2016, the FPC raised the countercyclical capital buffer rate to 0.5%, consistent with its view that financial conditions had moved out of the post-crisis phase, and the Committee’s intention to move gradually toward a buffer rate in the region of 1% in a standard risk environment. Following the result of the EU referendum, this rate was reduced to 0% in order to reduce regulatory capital buffers and increase banks’ capacity for lending as the real economy goes through a period of adjustment. 10 Aikman et al (forthcoming). 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  11  Under a reasonable calibration , a 15pp increase in credit growth in both countries over three years would increase the probability of a crisis by more than 6pp, as shown by the dark blue bars in Chart 3. Were there a reciprocity agreement between the two countries - by which an increase in the countercyclical buffer in one country is applied to lending in that economy by banks in the other country - they would both increase the countercyclical buffer by around 1pp, bringing the probability of a crisis down to only 1.8pp higher than before the shock - as shown in the yellow bars. However, if there were no reciprocity, any tightening of the countercyclical buffer will be partly offset by leakages. The higher buffer would boost resilience by less since foreign lenders in each country would be unaffected, reducing its overall effect on the crisis probability.