samchain/econo-pairs-v1 huggingface dataset:
Figure 3 shows the consequences, expressed as a percentage or percentage per year, of a reduction of the repo rate path by 0.25 percentage points over four quarters on quarterly inflation, the real repo rate, the real exchange rate, four-quarter inflation, production and hours worked. The solid curves show the effect of an anticipated reduction, while the dashed curves show the effect of an unanticipated reduction.6 We see that, all else being equal, such an anticipated reduction of the repo rate leads to an increase in inflation of just over 0.4 percentage points, an increase in output and the output gap of just over 0.4 per cent or percentage points, respectively, and an increase of the number of hours worked of approximately 0.35 per cent. If employment varies one-to-one with hours worked, which is realistic in a year or a couple of years’ time, employment will then increase by approximately 0.35 per cent. 5  One can also calculate the alternative forecasts for inflation and resource utilisation using so-called unexpected deviations from the main scenario’s repo rate path. This corresponds to a remarkable situation in which the Riksbank misleadingly announces the main scenario’s repo rate path but plans in a later monetary policy decision to surprise the market and the economic agents by deviating from the announced repo rate path. This would be the opposite of the transparent and clear monetary policy that the Riksbank says that it should conduct and does conduct.

As the Riksdag Committee on Finance states in its report in 2007: “A flexible monetary policy requires, in the Committee’s view, a high degree of transparency and that the Riksbank is very clear about why the various repo rate decisions have been made. This is also a prerequisite for the possibility to examine and evaluate monetary policy.” In my opinion, this requires a methodical and detailed discussion of the various monetary policy alternatives, together with the reason why one of them should be preferable to the others. The effects of a changed repo rate path on the forecast for inflation and resource utilisation are calculated with the help of the Riksbank’s model Ramses. In particular, they have been calculated using so-called expected deviations from the main scenario’s repo rate path. This corresponds to a situation in which the Riksbank clearly and transparently announces an alternative repo rate path that it intends to follow and that affects market expectations and thus inflation and the real economy.5 The deviations from the main scenario’s repo rate path that are shown in these graphs entail a reduction or an increase in the repo rate by 0.25 percentage points over four quarters. After this, the alternative repo rate paths gradually return to the main scenario’s repo rate path in accordance with the Riksbank’s historically-estimated reaction function.
Openness and integration – the new finance and new economy in a global context Speech given by Dave Ramsden, Deputy Governor for Markets & Banking  Bund Summit, Shanghai 27 October 2019  With thanks to Cormac Sullivan for his assistance in preparing these remarks and to Ashley Collins, Tom Mutton, Niamh Reynolds and Tom Smith for their helpful comments and suggestions. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Intro  It is my great privilege to address you today. I would like to extend my sincere thanks to the China Finance 40 Forum, Huangpu District Government and the Shanghai Finance Institute for the opportunity to address this esteemed summit. I am here speaking on behalf of the Bank of England, the UK’s central bank, where I am the Deputy Governor with responsibility for our financial markets and banking policy and operations, a key element of which is fintech. China and the UK are both leading global centres of financial innovation. We share economies where commerce is rapidly becoming digital and financial systems are evolving in response. We share populations that are increasingly open to new finance providers and new financial products. We also share a common goal of ensuring regulators manage and regulate appropriately, to ensure the financial system remains sound, both domestically and globally. The UK financial sector is a national asset and a global public good. Our strong partnership with our Chinese colleagues is at the heart of that.

Most important is the engagement and the opportunity provided for the emerging world to have a voice on the issues that have fundamental implications on us and on the broader global community. Jamie Caruana and the Board of the BIS, thank you for this. It was in 1995 when I was first invited to participate in a BIS roundtable meeting and the topic then was on capital flows. Today, twenty years hence, this is still a hot topic and remains an unresolved issue as the world continues to witness massive shifts in funds across borders. Indeed, such financial flows are having serious repercussions on financial markets, notably on the money and foreign exchange markets, the capital markets and other asset markets across the world. In addressing such challenges and the many others that confront Central Banks, we have benefitted immensely from the work by the BIS. Not only has the BIS always flagged the issues important to Central Banks through its many excellent reports, research works, background notes which have always been of the highest quality and of great benefit to the Central Bank community but the BIS has also had a pivotal role in providing a platform that facilitates and strengthens engagement and cooperation among Central Banks. My own development has benefitted from the experience with the BIS including its highly prolific Asian office. It was also my privilege to be perhaps the longest serving member of the governance group at the BIS.
This is supportive of the conclusion that the suite of postcrisis official sector actions in the U.S. has made the U.S. financial system more resilient, while not eroding global competitiveness. Provision of Financial Services I will now turn to the provision of financial services by looking at indicators of different types of banking activities such as lending or underwriting activities.10 A more rigorous analysis would identify supply and demand factors in an attempt to understand not just what has changed, but why, and could allow an assessment of whether financial services are efficiently provided. Nonetheless, this perspective provides a benchmark from the pre-crisis period to support some initial conclusions. In terms of traditional lending, (Figure 7) shows that the ratio of aggregate bank loans to GDP—a rough measure of credit intermediated through the banking sector—has recovered from the postcrisis low and is consistent with historical levels. In addition, aggregate net lending revenues, proxied by net interest income and scaled by GDP, are near historic norms despite compression of net interest margins in the low rate environment. Survey evidence of credit availability also shows ongoing provision of credit.

Greenwood, R. and Hansen, S. G. 2013. “Issuer quality and corporate bond returns”. Review of Financial Studies, Vol. 26, No. 6, pp. 1483-1525. Harris, M. and Raviv, A. 1991. “The theory of capital structure”. The Journal of Finance, Vol. XLVI, No 1. Jordà, Ò., Schularick, M., and Taylor, A. M. 2012. “When credit bites back: Leverage, business cycles, and crises”. NBER Working Paper No. 17621. 19  All speeches are available online at www.bankofengland.co.uk/speeches  19  Modigliani, F. and Miller, M. H. 1958. “The cost of capital, corporate finance and the theory of investment”. The American Economic Review, Vol. 48, pp. 261-297. Stanga, I., Vlahu, R., and de Haan, J. 2017. “Mortgage arrears, regulation and institutions: Cross-country evidence”. DNB Working Paper No. 580. Available at https://www.dnb.nl/en/binaries/Working%20Paper%20No.%20580_tcm47-370366.pdf. Thomas, R. and Dimsdale, N. 2017. “A millennium of macroeconomic data”. Bank of England OBRA dataset. Available at: https://www.bankofengland.co.uk/-/media/boe/files/statistics/research-datasets/amillennium-of-macroeconomic-data-for-the-uk.xlsx. 20  All speeches are available online at www.bankofengland.co.uk/speeches  20
A sustainable financial system, oriented to new long-term horizons and prudential to risks, serves to channel savings into the most competitive sectors of the economy. *  *  *  In the following, I would like to address the above-listed topics in more details, focusing on key points of the Bank of Albania’s work. 1. Economic and financial developments in 2010  According to INSTAT data, the Albanian economy is estimated to have grown by 3.9 % this year. Compared to 2009, economic growth is more balanced in terms of sectorial distribution and demand components. During 2010, the Albanian economy was characterised by gradual improvement of the aggregate demand and further consolidation of the macroeconomic stability. Economic development was followed by price stability, while the public debt and current account deficit narrowed. Economic growth relied mainly on foreign demand and increased Albanian exports, while domestic demand was sluggish. The latter decelerated due to public finances consolidation and budget deficit reduction in 2010, while consumer spending and private investments were affected by insecurity about the future and presence of spare capacities. Fiscal policy was oriented towards fiscal consolidation in 2010, following the stimulating nature in 2009. Fiscal consolidation accelerated especially in 2010 H2, following the approval of the revised budget. This consolidation was present on both, income and expenditure sides. Budget revenues increased by 8.4% y-o-y, reflecting the economic growth, expansion of taxpayers’ base, and privatisation receipts. On the other hand, budget expenditures decreased by 4.5%, attributable to reduction of government capital expenditures.

The Kingdom has maintained high sovereign credit ratings as assessed by global rating agencies for its financial solvency. The last rating was AA- awarded by Standard & Poor’s and Fitch for long-term credit rating in national and foreign currency, with a stable outlook . Confidence is still great and solid that strong growth and comprehensive development of the Saudi economy will continue under the wise leadership of the Custodian of the Two Holy Mosques. The Custodian of the Two Holy Mosques is well-known for his concern about his citizens, and he is determined to closely follow up their needs, including reduction of poverty, supporting Social Security, approving salaries increase & cost of living allowance, confirming wage earners, addressing the housing issue, supporting specialized development funds, etc. and other decisions aiming at improving citizen’s living conditions, which he deems as the objective and tool of the development process. We pray to Almighty Allah that there will be many happy returns of this dear national occasion for years and years for the citizens of this country, hoping that the Custodian of the Two Holy Mosques and his Crown Prince will continue to enjoy full health and wellbeing, with the Kingdom enjoying security and stability, to continue the development process, under our wise leadership. BIS central bankers’ speeches  1
Table 2 looks at this average ratings difference for a sample of banks and building societies in the UK, and among a sample of global banks, between 2007 and 2009. Two features are striking. First, standalone ratings are materially below support ratings, by between 1.5 and 4 notches over the sample for UK and global banks. In other words, rating agencies explicitly factor in material government support to banks. Second, this ratings difference has increased over the sample, averaging over one notch in 2007 but over three notches by 2009. In other words, actions by government during the crisis have increased the value of government support to the banks. This should come as no surprise, given the scale of intervention. Indeed, there is evidence of an up-only escalator of state support to banks dating back over the past century. 5 Table 3 takes the same data and divides the sample of UK banks and building societies into “large” and “small” institutions. Unsurprisingly, the average rating difference is consistently higher for large than for small banks. The average ratings difference for large banks is up to 5 notches, for small banks up to 3 notches. This is pretty tangible evidence of a second recurring phenomenon in the financial system – the “too big to fail” problem. It is possible to go one step further and translate these average ratings differences into a monetary measure of the implied fiscal subsidy to banks.

In some jurisdictions, national supervisors will conduct additional field tests to determine whether the new rules deliver the levels of capital we expect. Similarly, in all jurisdictions, there will be a period of time during which banks will calculate their capital requirements in parallel under the 1988 Accord and under Basel II. National field tests and the period of “parallel running” of the new framework will serve as some of the final reality checks for Basel II prior to its implementation. We recognise that these tests and reviews will demand resources and substantial efforts from both banks and supervisors. Yet I must emphasise that neither banks nor supervisors will be able to evaluate the calibration of the new framework - and hence its effectiveness - if banks do not participate fully and seriously in the national field tests or in the periods of parallel running. I urge you to devote your best efforts and resources to these undertakings. Only you can provide the data that all of us will need to ensure that Basel II functions as we intend. b)  Monitor ongoing advances and clarify and provide guidance for selected rules  A second area where supervisors are active is in monitoring ongoing advances in risk management while clarifying and providing supplemental guidance for some of the rules. Like the development of the framework itself, this work will require a great deal of communication and co-operation between banks and supervisors.
On this opportunity, I wish to quote the three premises which, according to Donald Kohn 4 , the Federal Reserve Vice Chairman, are necessary to justify the activities undertaken by central banks to pursue this aim:  1  Borio C., Lowe P. Asset Prices, Financial and Monetary Stability: Exploring the Nexus, BIS Working Paper, No. 114, July 2002. 2  See references at the end of the speech. 3  Rybiński K., Globalizacja w trzech odsłonach, Difin, Warszawa 2007. 4  Kohn D., Remarks by Donald Kohn at Monetary Policy: A Journey from Theory to Practice, An ECB Colloquium held in honor of Ottmar Issing, 16 March 2005. BIS Review 134/2007  1  •  a central bank must be able to identify bubbles on an asset market in a timely fashion with reasonable confidence as to the adequacy of the findings of its analysis,  •  there must be a fairly high probability that a modestly tighter policy will help to check a further expansion of speculative activity on a given asset market,  •  the expected improvement in future economic performance must be sizeable and bigger than expenses disbursed by the economy as a result of conducting those activities.

The last condition points to the restricted use of interest rates for the purpose of bursting a bubble, since the level of interest rates has a bearing not only on decisions taken by entities directly engaged in the process of forming a bubble but in fact on all the entities operating in the economy. To evoke a vivid picture, the use of interest rates to this end may be compared to the use of an atomic weapon in the battlefield – for an atomic bomb makes no distinction between friend and foe. Donald Kohn’s conditions are not easy to meet. Therefore, the opinion now prevails that supervisory authorities must enhance their macroprudentail activities 5 . Consequently, one of the conclusions is to take recourse to supervisory instruments with a view to bearing on decisions of those market participants which are primarily responsible for bubble formation and report to supervisory authorities. By way of illustration, although the supervisory authorities do not interact with financial institutions which extended a large part of subprime loans or with arbitrage funds which purchased instruments backed on those loans, they continue to oversee the process of credit risk management and liquidity at banks. Banks played an important role in the process of spreading the crisis. as investors and providers of liquidity to companies – intermediaries in the sale of assets and companies investing in those assets, as well as by organizing the securitization of those assets. The role of good supervisory policies cannot be underestimated 6 .
2  BIS Review 82/2007  advantage of all the opportunities offered by new technologies, including ICT, and by the new division of labour initiated by globalisation. Restructuring of the productive sector and reengineering of the production processes appear to be more difficult in a less flexible economy like the European one, implying a negative influence on productivity. The structural characteristics of the US economy – a more flexible labour market, a higher degree of competition in product markets and lower barriers to entry for new firms – were more conducive to exploiting the opportunities provided by new technologies. It remains relatively easy to understand that the absence of sufficient flexibility in Europe and in the Euro area has not permitted us to take advantage of the new opportunities that were offered and therefore that Europe has not benefited from an increase in labour productivity (and in total factor productivity) like the United States. What remains hard to explain, is that not only labour productivity growth in Europe did not accelerate but that it slowed down significantly, by more than what would be accounted for by increasing employment in the unskilled segment of the labour market. A conjecture that seems to me important to test is whether in periods of very rapid technological and structural transformations not only less flexible economies are not taking advantage of the situation but they might paradoxically behave less properly than in more “normal” times.

The economic performance of the euro area since the mid-1990s Since 1996, the annual growth rate for the euro area has averaged 2.1% per year compared to 3.3% in the US. What are the fundamental causes of this unsatisfactory low trend growth in the euro area? The answers can be found by looking at the factors that determine potential or long-term economic growth, namely 1 : •  The degree of labour utilisation,  •  Productivity growth,  •  And the demographic trends. - Over the period 1996-2006, the euro area witnessed a slight improvement in the utilisation of labour, which increased on average by 0.4% per year (compared with 0.1% in the US) when defined as the total annual hours worked divided by the total population. Labour utilisation reflects the extent to which the potential labour resources in an economy are actually utilised and therefore have a direct influence on output growth. This improvement in labour utilisation mainly reflects the significant rise in the euro area overall employment rate from 58% in 1996 to 64.4% in 2006, accompanied by a decline in the aggregate unemployment rate from 10.7% to 7.9%. Although this is a very encouraging fact, which shows that the positive employment effect we witnessed over the last ten years has significantly helped us to partly counteract the growth differential to the US, one has to remain aware of the inferior starting position of euro area countries.
The noticeable slowdown across consumer and commercial loans that started in the third quarter continued into the fourth quarter, causing these loans to post an annual growth rate of 8.7 and 16.2 percent, respectively, at the end of the year (Chart 9). Thus, commercial loans continued to grow at a faster pace than consumer loans in the fourth quarter of 2015, following the same pattern since early 2014. We expect that these developments in loan growth and loan composition will contribute to the rebalancing process and financial stability as well as limit the effects of the recent cost pressures on inflation. The annualized growth rates of 13-week averages show that consumer and commercial loans lagged far behind past years’ averages; the former across 2015, the latter mainly in the second half of 2015. However, as reflected by 13-week averages, both loans, particularly commercial loans, saw a modest rise during the  4  BIS central bankers’ speeches  last quarter of 2015 (Chart 10). The recent adjustments made to the risk weights of consumer loans are likely to support loan growth in the upcoming period. Yet, due to ongoing tight financial conditions, we expect annual loan growth rates to remain at reasonable levels in the coming months. Chart 9. Chart 10. (Adjusted for Exchange Rate, Percent)  Rate, 13-Week Moving Average, Percent)  Annual Credit Growth Rates  Source: CBRT. 2. Annualized Credit Growth Rates (Adjusted for Exchange  Source: CBRT.

If the telecom industry is excluded from the figures for trade and industry, productivity increased by only 1.9 per cent during the period 1995-2000, compared with a growth of 2.8 per cent if it is included. This sector has now greatly declined in importance and there is apparent confusion over its future development. Given this, the average rate of wage increase should not exceed 3.5 per cent over the coming years. In conclusion, it may be worth pointing out that if Sweden joins the Eurosystem, there will be other factors affecting the nominal wage cost scope. This is because the ECB's inflation target may be even more ambitious than the Riksbank's. In this case, and if productivity growth remains unchanged, a lower rate of increase will be needed for nominal wage costs. Summary I shall conclude with a summary. The realignment of stability policy has contributed to wage formation functioning better than previously in the two most recent wage bargaining rounds. The rate of increase in nominal wages has approached reasonable levels, while wage earners have experienced large increases in real wages. This development is underpinned by a good development in productivity. When we look ahead, the picture is more worrying. Profits are under greater pressure. It is not certain that productivity growth can remain as high as it was during the latter part of the 1990s. Given these factors, and taking into account international developments, there is a need to bring the average rate of wage increase down to, or even below, 3.5 per cent.