samchain/econo-pairs-v1 huggingface dataset:
Price/earnings ratios had risen to dizzy heights at their millennium peak, and most of what we've seen since then has been a normalisation of the equity risk premium - allowing for lower real interest rates. The underlying question is, is that normalisation complete? I don't know the answer to that question. But I am impressed that on some measures of earnings P/E ratios are back to their longer-term averages, and on most measures they are closer to the levels of the mid-1990's before they began their ascent to their 1999-2000 heights. But in any event that's not the whole story. In part the apparent disconnect between the macro-economic prospect and business and financial sentiment over the summer can be explained by successive non-macro-economic shocks - 9/11, geopolitical concerns, and recurrent concerns about the reliability of corporate accounts in the wake of the governance and accounting failures we saw, notably in the US. The worry then was that markets, and business sentiment, were threatening to overshoot on the downside, just as they clearly had on the upside, and that that would blow back onto the convalescent macro-economy. Happily, while these non-macro-economic concerns have not completely gone away, in the past month or so equity markets have recovered most of the losses they suffered in the further downwards lurch in September and while they remain somewhat fragile they do seem to have a better underlying tone. So it may be - just may be - that we are moving on to somewhat firmer ground.

But if the suitor got any one of the three riddles wrong, then he would be put to death, as indeed dozens of her suitors already had been. But as I sat there enjoying the opera, it slowly began to dawn on me that it isn't really a love story at all - it is an allegory about the state of the global economy. Turandot clearly represents the present international situation - potentially very attractive but immediately somewhat chilling. And her unfortunate suitors are obviously the world's woefully misunderstood and under-appreciated central bankers! Turandot's first riddle was "What is the ghost, which all the world invokes and is constantly renewed?" As I sat there it seemed obvious to me that the answer must be the US economy. For some years in the late 1990's "all the world" has looked to the US to keep it afloat - through the Asia crisis, then Russia and Long-Term Capital Management, with Latin America intermittently thrown in. And the US did a great job. But then two years or so ago the US began to fade - or give up the "ghost" if you like - with an investment-driven slowdown associated with the bursting of the ICT bubble and correction of over-exuberance in equity markets. But the ghost has shown clear signs of renewal over the past year; in fact US output in the third quarter was 3% up on a year earlier.
Harmonization of standards and codes to international best practice must be done. Hedging markets must be available for both currency risk and interest rate risk, and this may mean a rethink on capital controls. Perhaps a gradual step-by-step relaxation in needed. 2  BIS Review 28/2003  Transparency is also required both in price discovery and the management of both the macroeconomy and the individual corporates. The legal system must respect creditors’ rights, and for investment products to be available for sale across Asian countries, a uniform single passport of consumer production by the SEC’s must be made. Now comes the final question. What is the purpose of the Asian Bond Fund? You may recall that the Asian Bond Fund was announced on 2 June 2003 at US $ billion by 11 central banks in East Asia and Pacific countries. Initially it will invest in sovereign and quasi-sovereign bonds issued by Asian governments in the international markets. This by itself already sparked a keen interest in Asian bonds. I know of at least one Asian central bank that had not invested in Asian bonds before, other than in JGB’s, but has now started buying directly in addition to investment in the Asian Bond Fund. Thailand is now looking at doing this also. I am sure there will be more central banks both in Asia and outside looking at Asian bonds at the international level because of this initiative.

But if one looks closely, one will find that a good portion of this are raw materials, parts, and components produced in one country and sold to another for further processing or assembly for sale to a third country within or outside Asia. The production of goods for final consumption in Asia is still low, with the exception of Japanese and Korean brands. And while China’s imports from ASEAN have increased substantially in the past few years, their consumption is still mainly in food products, raw materials and low value added products. For luxury goods, their being brand-conscious, ASEAN products have not been able to compete well. This will change over time when Asian products gain more differentiation and sophistication. For example, at the moment, Thai palm oil is no different from Malaysian. There can be no mutual trade. But when it becomes part of the national cuisines, trade and exchange could occur. The more value is added, the more Asia will trade with each other for eventual consumption. But for the moment, the emphasis is more on cooperation than integration. So the second question: If this is so, why are there various monetary initiatives going on in Asia? The way I see it is that even though the level of economic integration is presently still not fully advanced, the financial linkage and contagion affect is very high. Part of this may have to do with the fact that Asian countries lend a good deal of money to each other.
Simon M Potter: Some observations and lessons from the crisis 1 Remarks by Mr Simon M Potter, Executive Vice President of the Research and Statistics Group of the Federal Reserve Bank of New York, at the Third Annual Connecticut Bank and Trust Company Economic Outlook Breakfast, Hartford, Connecticut, 7 June 2010. *  *  *  Introduction Among the many important lessons coming out of the global financial crisis that started in the summer of 2007, possibly the most important revolve around how complex the global financial system is, how quickly confidence in that system can deteriorate, and how difficult it is to come up with simple and robust solutions to stabilize the system in real time. My remarks today will break the progression of this crisis into four distinct phases. In doing so, my intention is to highlight some of the actions taken by the Federal Reserve to manage the crisis, and to offer what at least in retrospect seem to be clear lessons on how to promote financial stability outside the heat of a crisis.

The Federal Reserve used a lender-of-last-resort authority it had been granted in the 1930s under Section 13(3) of the Federal Reserve Act to facilitate the transaction. Further, on that Sunday, March 16, the Federal Reserve announced the introduction of the Primary Dealer Credit Facility (PDCF), an emergency extension of the standard discount window facilities to primary dealers. Finally two days later on March 18, the Federal Open Market Committee (FOMC) cut the fed funds target by 75 basis points, bringing the total decrease in the target since the start of the crisis to 300 basis points. At that time, many saw this point as the peak of the crisis and assumed that the weaknesses in the financial and regulatory system would be fixed as the crisis subsided. 2  The Challenge of Central Banking in a Democratic Society. 3  Primary dealers are broker-dealers who trade in government securities directly with the Federal Reserve. BIS Review 81/2010  3  At this point, it is worth spending a moment to explain in a little more detail the basic elements of Section 13(3) of the Federal Reserve Act, a provision that had only previously been used for relatively small loans in the 1930s. 4 Section 13(3) allows a Federal Reserve Bank to lend to any individual, partnership or corporation under the authority of a supermajority of the Federal Reserve Board in unusual and exigent circumstances, if adequate credit accommodations are not available from other banking institutions and if the Federal Reserve Bank is secured to its satisfaction.
Higher educational attainment and maternity leave have also made a contribution. Just as there are new companies that start up each year, there are also many people who change jobs every year. On average for the years 2000-2005, 260 000 work contracts were terminated. Every eighth person changed jobs. At the same time, new jobs were created, bringing net annual job creation to 4 000 in this period. Job change and the diffusion of new technology tend to go hand in hand. The key here is that companies have had the opportunity and capacity to rationalise and adapt when new technology has made this profitable. The modernisation of economic systems must be given the main credit for the solid performance of Nordic countries over the past 10-15 years. Norway is benefiting from oil, but developments in the mainland economy have also been considerably more stable. Global economic developments have brought us substantial gains, but this does not explain the strong productivity gains in our service industries. Moreover, it may appear that cooperation in companies is better in Nordic countries than in many other European countries. In Norway, there are few examples of objections to investing in new technology on the grounds that it will eliminate jobs. On the contrary, employees will often be the first to support new investments to strengthen a company’s position in highly open and competitive markets. Labour market adaptability is fairly similar in the Nordic region, even though legislation and rules are quite different.

That said, there are some uncertainties in the current situation, namely geopolitical instability, the rise in oil prices and the global macroeconomic imbalances which, naturally, affect the outlook for the euro area economy. Despite such uncertainties, the European economy should post notably higher growth this year than last, on the basis of expanding export markets and a gradual recovery in internal demand. At the same time, the momentous step taken in European construction with EU enlargement should be an additional incentive for seeing through the economic and institutional reforms needed to revitalise European growth. BIS Review 39/2004  3  The Spanish economy Addressing the behaviour of the Spanish economy in 2003 and in 2004 to data, I should begin by pointing out that our economy has, once again, managed to improve on the trajectory followed by the euro area. Internal demand in particular has continued to respond to the expansionary impulses provided by monetary conditions that have remained very generous for Spain’s domestic situation. The more disciplined application of other economic policies and a more flexible reaction on the supply side of the economy, in line with the structural reforms undertaken, have helped maintain a setting favourable to the progressive strengthening of activity. This confrms that the slowdown which touched bottom in May 2002 has been put behind. The growth differential with the euro area widened to almost two percentage points and held at around this level in 2004 Q1.
The answer sought while forming forecasts and monetary policy outlook in the Inflation Report is: “What is the monetary policy stance that will keep inflation close to the target in the medium-term?”  4  BIS Review 4/2008  The monetary policy stance in this sense does not only consist of the current level of shortterm interest rates. Monetary policy stance indicates the prospective path that short-term interest rates will follow in a period that extends from today to medium term. Sharing with the public the interest rate assumptions that form the basis of forecasts, though qualitatively, is a remarkable step towards enhancing the transparency and predictability principles that are essential for inflation targeting. Communicating with the public about the possible Central Bank policies influences mediumterm market interest rates via expectations and strengthens the transmission mechanism. However, it should be reminded once again that the monetary policy stance path pronounced in the Inflation Report is produced according to currently available information and that each new data release related to the medium-term inflation outlook would necessitate the revision of the future monetary policy stance. Under the inflation-targeting regime, revisions in the monetary policy stance are not an exception, but a rule. Thus, the monetary policy stance established according to currently available data should not be interpreted as a commitment. Any unforeseen change in the variables that affect inflation outlook calls for the re-definition of the monetary policy stance. What is important here is to share openly with the public the reasons of the monetary policy stance update.

To sum up, despite the fact that nearly half of the CPI is composed of energy, food, and administered goods prices, it is evident that monetary policy is still capable of keeping the main inflation trend under control via other items. As stated also in the last two years’ monetary policy statements, the inflation target would be changed only if sharp and long-term deviations from the target occur due to factors beyond the control of the monetary policy such that the medium-term targets no longer make sense. Within this framework, while considering the possibility that inflation might be exceeding the target for a while in the short run, the Central Bank maintains the 4 percent inflation target hinging on the evaluation that the general trend of inflation is downwards. The forecasts presented in the Inflation Reports will continue to refer to two-year periods. In phases when inflation is above the target, the forecasts presented in the Inflation Report become more important. The forecasts inform the public about the path that inflation will follow while moving towards the medium term target. In other words, the reference value established for economic units is the inflation forecast in the short-run and the inflation target in the long-run. Another message that inflation forecasts contain is the monetary policy stance.
2  BIS Review 85/2009  As a member of the APG, Samoa is required to undertake a domestic review of its NPO sector to determine the degree of vulnerability to money laundering and terrorist financing activities. I should stress that this workshop is part and parcel of such a review. Under the conditions of membership, all APG members have committed to implement the FATF Forty Recommendations and Nine Special Recommendations. Special Recommendation VIII relates to non-profit organizations. SRVIII calls on all countries to “review the adequacy of laws and regulations that relate to entities that can be abused for money laundering and financing of terrorism. Non-profit organizations are particularly vulnerable and countries should ensure that they cannot be misused: i)  by terrorist organizations posing as legitimate entities;  ii)  to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; and  iii)  to conceal or obscure the illegal diversion of funds intended for legitimate purposes to terrorist organizations.”  What is the scale of the problem? By its very nature, money laundering occurs outside of the normal range of economic statistics. Nevertheless, as with other aspects of underground economic activity, rough estimates have been put forward to give some sense of the scale to the problem. The International Monetary Fund (IMF), for example, has stated that the aggregate size of money laundering in the world could be somewhere between two to five percent of the world’s Gross Domestic Products (GDP).

Today, I will first elaborate on two challenges that will continue uniting us: the need for good national economic policies, pro-business and long-term oriented; and the need for active multilateralism to face our global challenges. Then, I will dwell on a challenge that we will have to address together: our future relationship and Brexit. ** I. The need for pro-business and long-term national economic policies  Let me start with the challenge of national economic policies. In the euro area, the economic recovery is now robust and broadly-based across countries and sectors. GDP growth should stand at at least 2.2% in 2017 according to our ECB forecast. The ECB’s accommodative monetary policy has contributed to this acceleration of growth in the euro area. Yet monetary policy cannot be the only game in town. Structural reforms in each country, along with stronger European coordination, are of the essence to boost potential growth in the medium term and to treat the fatal disease of mass unemployment. In recent years, several European countries, including in Southern Europe, have successfully carried out in-depth reforms that are yielding positive results in terms of growth and employment. Germany, the Netherlands and Nordic countries, as well as Spain and Portugal, are proof that economic success, a solid single currency, and the European social model are compatible. We should run pro-business, long-term oriented, fiscally sound economic policies, while keeping the core elements of a common social model, which can be the DNA and pride of Europe in this highly divided world.
The reduced earnings for the mining sector may translate into lower investments and production. Further, some mining companies, which were carrying out exploration works, have suspended these activities. Ultimately, all this lead to job losses in the country’s extractive industry, leading to lower income tax revenue. In addition, the downturn will reduce Government’s capacity to develop the much needed infrastructure as it may have to scaledown its capital expenditure in line with lower realized revenue. Loss of employment In the real sector of the economy, the impact of the crisis has been reflected in the scaling down of production or the closing down of some mining operations due to low copper prices. This has had the inevitable consequence of loss of jobs. However, following the reopening of some mines, the situation has slightly improved. External position The declining earnings from copper exports adversely affected Zambia’s balance of payments position. For instance, during the fourth quarter of 2008, the overall balance of payments deficit widened to US $ million from US $ million recorded the previous quarter. Merchandise export earnings declined to US $ million from US $ million realised in the third quarter of 2008 following a sharp reduction in metal export earnings. Metal export earnings declined by 23.1% to US $ million in the fourth quarter of 2008 from US $ million the previous quarter. Metal export earnings at US $ million in the first quarter of 2009 were 49.8% lower than the US $ million recorded in the similar period last year.

Tourism Apart from mining and related companies that are affected by the effects of the global recession, tourism has also been negatively impacted. The number of foreign tourists is anticipated to decline owing to financial problems and credit crunch their countries of origin are facing. Availability of credit Perhaps the most challenging effect of the global financial crisis, especially for developing countries like Zambia, is its impact on private sector investment. Between 2006 and 2008 credit to the private sector grew strongly (at an average of 45.6% per annum), largely driven by the expansion of consumer credit and the strong growth in the domestic economy. An immediate consequence of the financial and economic crisis has been a curtailment of credit lines and a slow-down in FDI flows. In 2009, domestic credit is expected to slow down as financial institutions adopt more conservative lending practices and tighten their lending standards. In addition, the deterioration in corporate and household balance sheets is now being translated into higher non-performing loans (NPLs) as a percentage of total assets in the banking sector (from 6% in mid-2008 to 10% in May, 2009 – an increase of 67%.). The deterioration in NPLs is now across all the past due loan categories. BIS Review 86/2009  3  Policy response In responding to the crisis, the Government is taking steps to maintain macroeconomic stability and continue encouraging investments that will lead to diversification of the economy and safeguard vital social services.
29.09.2022  Monetary policy in the euro area: where do we stand and where are we going? XXI Congreso de Directivos CEDE, Bilbao Pablo Hernández de Cos Governor  Your Majesty, authorities, ladies and gentlemen, Let me start by thanking the organisers for the opportunity to address you at this XXI CEDE Congress. Today, I will elaborate on how we can bring price stability back to European citizens in the context of current turmoil as it is the responsibility of the ECB’s Governing Council to bring inflation down to 2% in the medium term, the inflation target that operationalises our price stability mandate.1 And we have to do this in none too easy times. After a pandemic that has cost more than a million lives in Europe alone, and with a war of aggression in Ukraine, European households are experiencing a drastic surge in their costs of living. Consumer prices in the euro area rose by 9.1 % in August compared to the previous year, an all-time high for the monetary union. The increase in prices has been especially acute in the energy and food components of the consumption basket. But it has become more general over time, as reflected in an underlying inflation rate of 4.3 % in August, another record high, reflecting to a large extent indirect effects of higher energy and food commodity prices through firms’ production costs.

Second, our decisions are based on the inflation path over the medium run, not on the latest observed inflation. This requires projecting inflation via different approaches. Recent ECB staff forecasts see inflation averaging 2.3% in 2024. Given this, earlier this month we decided to front-load the normalisation path of our key interest rates, and to announce further rate hikes down the road, in order to ensure the return of medium-term inflation to our 2% target. Third, it is very difficult to know how much further our key rates will need to rise eventually in this hiking cycle, given the huge uncertainty that we face in the current context. But for this very reason, economic models are helpful in providing us central bankers with some guidance. I have provided in this speech some estimates based on models developed by Banco de España staff. Crucially, this is a data-dependent forecast which may change as time goes by and new information comes in. Also, it will depend on our future decisions regarding our asset purchase programmes. I hope that my words have reassured you about our determination to rein in inflation without causing unnecessary suffering to our fellow euro area citizens. We live in difficult times, but we expect to rise to the challenge. Thank you for your attention. 8