samchain/econo-pairs-v1 huggingface dataset:
As you can see from this second graph of employment growth by Federal Reserve district going back to January 1990, the Eleventh District has outperformed the nation on the job front for over two decades. Note the slope of the top line, which depicts job growth in the Eleventh District compared with all the rest and, importantly, relative to the black line – the seventh one down – the employment growth rate for the country as a whole. 2  BIS central bankers’ speeches  Here is the point: Judging solely by the employment data, Texas went into recession seven months after the nation, in September 2008, and came out three months earlier, in December 2009.2 We have now recovered fully from the Great Recession and are back on pace in leading the nation in job growth. Yes, we have a very large number of people earning minimum wage, a still-too-high unemployment rate of 7.8 percent and many other deficiencies, all of which were pointed out in high relief when a certain Texas governor was briefly in the hunt for his party’s nomination for the presidency. But I’ll bet you, those who love to point these things out and are given generally to Texas-bashing would give their right – or should I say, left-arms to have the record of job growth of the Eleventh Federal Reserve District that is documented by these charts. So good citizens of Austin and of Texas, you have much to be proud of.

What we don’t know is what the shape or timescale of the recovery will be. It’s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services. Our Response Despite this extraordinary uncertainty, at the Federal Reserve we worked quickly to put measures in place to support the economy and set the foundation for a strong recovery. During the first half of March, the Federal Open Market Committee (FOMC) brought the target range for the federal funds rate to near zero.1 The FOMC has indicated that it expects to keep interest rates at this level until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.2 Bringing interest rates down to near zero serves two purposes. First, low interest rates make it easier for households and businesses to meet their borrowing needs. Second, they foster broader financial conditions that will help promote the rebound in spending and investment needed to return the economy to full strength. The New York Fed The New York Fed has important and unique responsibilities in supporting liquid and wellfunctioning financial markets. Working alongside our colleagues in the Federal Reserve and other agencies, we are taking rapid and significant actions to supply liquidity and to stabilize critical parts of our financial system.
I visited a commune and listened to an old woman singing praises of Chairman Mao and the Liberation. I have visited China regularly since then. I have seen China's transformation through the decades - not just the physical transformation but also the change in mindset and values of the people. Pop songs have replaced revolutionary songs. Gucci, Armani and other luxury brands are worn instead of Mao jackets. The communes have given way to industrial parks, like the Suzhou Industrial Park, an integrated township which Singapore helped build. And golf has become popular in China. Most analysts project China to continue to grow by 8% per year over the next 10 years. I share this optimism. However, we should not underestimate the immense challenges before China. The Chinese leaders certainly do not. Premier Wen Jiabao once explained to me the magnitude of China's problems through the concept of "division and multiplication". He said that China's resources become very small when divided by 1.3 billion people, while a small problem becomes huge when multiplied by 1.3 billion. Despite the tremendous changes, China is still underdeveloped and suffers from great imbalances in its development. Beijing's top priority now is to spread the fruits of development more widely. The government recognises the risks for the country if growth in the coastal provinces is not spread to the inland provinces. I believe that Chinese leaders have the capability and the will to do what is necessary to sustain China's growth and ensure political and social stability.

Secondly, inflation expectations rose steadily – albeit from a low level – particularly in the UK and the US (cf. chart 2b). This trend was reinforced by the outcome of the US election, which fuelled expectations of a more expansionary fiscal policy and a stronger increase in US government debt. The rise in yields also reflects higher risk premia caused by generally heightened uncertainty surrounding the future course of US fiscal and monetary policy. Page 1/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  Thus, the increase in yields was particularly pronounced in the US. Ten-year US government bonds recently stood at around 2.5%, 1 percentage point up from mid-year. By contrast, yield increases in Japan and Europe were on a smaller scale. Yields on ten-year Swiss Confederation bonds recently stood at –0.1%, half a percentage point up from mid-year. Approximately 60% of outstanding Confederation bonds are currently still generating negative yields, compared with around 95% at the end of June. The global rise in yields has led to a reduction in the share of negative-yielding government bonds worldwide from over 30% at the end of June to around 20% most recently. Although this trend can be seen as a step towards normalisation on the bond markets, it is important to recognise that higher US yields and the associated appreciation of the US dollar could become a burden for some emerging economies.
7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Chart 7: Improving Pull Factors have reduced Capital Flows-at-Risk  2  Contribution of pull factors  0  -2  Gross outflows  Average Capital Flows-at-Risk  Gross inflows  Capital Flows-at-Risk as a % of GDP  -4 1996  1999  2002  2005  2008  2011  2014  2017  Sources: IMF and Bank of England staff calculations. Notes: The grey bars on this chart show the unconditional 5th percentile of the distribution of capital flows in a panel of 13 EMEs since 1996. The purple bars build on the contribution of pull factors to the conditional 5th percentile of capital flows in the current quarter and two quarters ahead. Pull factors are proxied by domestic financial condition indices (DFCIs), which are mean-orthogonalised by a global financial conditions index (GFCI). The coefficient on the DFCIs is estimated by panel quantile regressions. The chart shows PPP-weighted averages across the 13 EMEs in our panel. See Annex for further details. The Bank of England’s analysis finds that the conventional prescription to concentrate on putting one’s own house in order had merit: pull factors were the main drivers of capital flow instability prior to the 2008 crisis (Chart 7). Over the years, this advice has been taken to heart.13 80% of EMEs are now inflation-targeters, compared to none just prior to the Asian Financial Crisis.

Chart 15: Major structural changes are increasing the sensitivity of Capital Flows-at-Risk to push shocks  2006  2018  2030 excluding growth in 2030 including growth in EME external balance EME external balance sheets sheets  -1  -2  Impact of the increasing role of investment funds  -3  Impact of the shift to market-based finance Impact of higher share of FX-denominated debt in EMs Pre-crisis Total  -4 Capital Flows-at-Risk as a % of GDP  Sources: IMF, EPFR, IIF, Bank calculations. Notes: This chart shows estimates and projections for the sensitivity of Capital Flows-at-Risk to negative push shocks at different points in time. The chart is based on separate panel quantile regressions for FDI, banking, market-based finance and investment fund flows. We use the global FCI (push), country-specific FCIs (pull), and the share of NFC debt denominated in foreign currency as regressors. The third bar combines regression results with projections for the composition of flows and the role of FX-denominated debt in 2030, as described below and in footnote 21. The fourth bar also takes into account projected growth in EM’s external balance sheets as described below and in footnote 21. In particular, we estimate that the growing shares of FX-denominated debt, market-based intermediation and, within that, the increasing role of investment funds, have increased the sensitivity of Capital Flows-at-Risk to push factors by 50% since the crisis (second bar, Chart 15) – largely using up the self-insurance purchased by EMEs. Left unattended, these vulnerabilities are likely to grow.
Designing survey questions for household inflation expectations The launch of the SCE followed an extensive testing phase, dubbed the Household Inflation Expectations Project (HIEP), which was initiated in 2006 to explore the feasibility of implementing a new survey of consumer expectations with a focus on inflation expectations.16 The HIEP had several objectives: to improve existing measures of consumer expectations, to clarify the process of expectations formation and updating, and to study the links between reported expectations and actual behavior in a variety of realms. The HIEP set up a working group – composed of New York Fed and Federal Reserve System economists, academic economists, behavioral psychologists, and survey design experts – that devised, conducted, and analyzed a series of cognitive interviews and experimental surveys to explore various dimensions of the planned new survey. In particular, the HIEP analyzed the information content of the inflation expectations questions in the University of Michigan Survey of Consumers, the primary source of  14  Most of these surveys are repeated at a yearly frequency. The SCE currently contains quarterly surveys on the housing market; the labor market; informal work participation; and consumption, saving, and assets. A subset of these surveys is wholly or partially designed by other Federal Reserve Banks. 15  Bruine de Bruin et al. (2016). 16  See van der Klaauw et al. (2008) and Armantier et al. (2013) for overviews.

In both the SPD and the SMP, many of the questions are tailored toward matters that are of policy relevance at the time of the survey. Further, we use the fact that the respondents are market professionals with a good understanding of finance and economics to ask direct and at times technically complex questions. In this regard, the surveys contrast with the SCE, which uses language that is accessible to respondents with no economic or financial training.41  37  See Armantier et al. (2016). 38  Using a standard test of the difference between two distributions, the change from September to January is significant at the 1 percent level. The change from April to May has a “p-value” of 16 percent. 39  This dispersion implies that random samples of small size (less than one thousand) will exhibit variability even if the underlying population distribution of inflation expectations remains constant. 40  Correia-Golay, Friedman, and McMorrow (2013) provide an introduction to the SPD. 41  Many surveys of market participants do not use their technical sophistication to the extent necessary to produce robust measurement of expectations. For example, currently many surveys ask market participants to identify the FOMC meeting at which the next increase in the fed funds target range will most likely occur. This question implicitly assumes that the next rate change will be an increase; moreover, eliciting expectations about the most likely meeting when the number of future meetings is large is particularly uninformative.
In the first two cases (2001 and 2002) events in international financial markets led to rapid depreciations, unrelated to country fundamentals. In the last case – 2008 – we considered it prudent to build up reserves in a period in which the exchange rate was below fundamentals and global financial markets were under extreme stress. Let me now refer to the interaction between financial and price stability from an ex-post perspective, i.e. once a financial shock (crisis) has hit the economy. From an ex-ante point of view I discussed that there are occasions in which these two objectives may not be completely aligned. From an ex-post perspective, these objectives are in general consistent, which will reinforce the need for strengthening the ex-ante dimension of financial stability. Suppose that a shock in financial markets (of a domestic or external nature; based on fundamentals or simple contagion) hits the economy. This shock will result in an increase in the cost of capital, bringing down investment and aggregate demand. The reduction in aggregate demand reduces output and therefore also reduces inflationary pressures. This example shows that dealing with this “financial shock” is usually – and I will be explicit regarding this conditionality – consistent with pursuing price and output stability. From this ex-post perspective, financial and price stability can be addressed simultaneously. The instruments that monetary policy can use to deal with these financial shocks will depend on the nature of the financial shock.

Closer attention must therefore be paid to the financial fragility that accompanied this process – both to the factors that led to the distortions in asset prices and to the factors that amplified the crisis once the adjustment took place. Let me touch briefly on two of these factors:   The first is financial innovation. Despite a lot of public debate and criticism I believe that financial innovation is essentially welfare enhancing. However, we must not forget that financial innovation can also become a form of circumventing regulation. The way some securitized assets where used was the clearest case of this abuse. They were structured in a way that only secure tranches remained in the balance sheets of banks, and the others were sold, many times to off balance vehicles, allowing credit to expand with a weak capital base. The result was excess demand for certain securitized assets, and excess exposure of highly leveraged intermediaries to these assets. Moving forward, financial innovation needs to move in step with regulation to ensure that it adds value and is not just a form of evading regulation and aggravating financial fragility.   The second is liquidity transformation. Along with important benefits, liquidity transformation entails significant risks. We have known the vulnerabilities of liquidity transformation in the presence of aggregate shocks for a long time; in fact, many countries paid very dearly for this risk before central banks where set up to provide aggregate liquidity.
The negative gap at the recession’s lowest point in 2009 has been estimated at – 4 per cent by the European Commission and at – 7 per cent by the OECD. The GDP gaps of 2010 and 2011 according to both of these institutions can be disregarded, as their reports were compiled before the summer and, since then, GDP outcomes have been surprisingly high. In its latest report, the IMF reckons with a GDP gap of approximately 2.5 per cent for 2007, followed by a decrease to almost – 5 per cent in 2009 before reaching – 1.5 per cent in 2011. 8 (Figure 5. The GDP gap according to the Riksbank, the OECD, the IMF and the European Commission). All three organisations reckon that potential GDP has fallen in conjunction with the crisis. For example, the OECD estimates that potential GDP has decreased by an average of approximately 3 per cent for the countries in the OECD area, as a consequence of the crisis. Approximately two-thirds of this decrease is due to higher capital costs caused by the return to normal risk and interest rate levels after the abnormally low levels prevailing prior to the crisis, which is having a dampening effect on capital intensity. The remaining third is due to an increase in structural unemployment and a decrease in labour supply. As regards Sweden, the dampening effects of structural unemployment and falling labour supply are deemed to be below average, however.

In the Figure, they have been included as deviations from the average in 2000–2007, without taking a stance on which levels should be considered normal. They may have been affected both by the reforms made and by the deep recession. These are, of course, important issues to be addressed, but I will not go into them today. (Figure 6. Labour market gaps). The various labour market gaps co-vary for natural reasons. However, the employment rate, the employment gap and the hours gap reach zero at the start of 2011 and are faintly positive for the rest of the forecast period, while unemployment is above average over the entire forecast period. It is common for unemployment to increase rapidly in a deep recession and decrease slowly during the recovery. However, it is also possible that we are underestimating the strength of the recovery in the labour market – as, indeed, we have done recently. It can also be noted that the positive deviations from the average are of the same magnitude in 2007 as they were at the previous peak in 2001. The National Institute of Economic Research’s Economic Tendency Survey can also be used to describe resource utilisation. There exists a clear connection between various variables in the Survey. For example, companies’ planned price increases co-vary with the other variables, for example shortage of labour. (Figure 7. Indicators for the business sector). However, most of these reported variables are ones that show changes. This is true of demand, for example.
Note: Coefficients are recalculated into percentages as per Palmquist (1980) due to log-linear specification. A negative pay gap in this chart indicates that women earn less than men. Chart 22: Conditional gender wage gap under specification (5) Difference in lnpay  0.05 0 ‐0.05  Gender pay gap  ‐0.1 ‐0.15 ‐0.2 ‐0.25 ‐0.3  1994‐1998  1999‐2003  2004‐2008  2009‐2013  2014‐2019  Source: ONS Labour Force Survey and Bank of England calculations. Note: A negative gender pay gap in this chart indicates that women earn less than men. 11 The regressions assume the effect of the controls on pay is homogenous between different groups. If we run a Chow test on this restriction, it fails in our sample. This would be a useful area for future research. 12 Coefficients are recalculated into percentages as per Palmquist (1980) due to log-linear specification. 27  All speeches are available online at www.bankofengland.co.uk/speeches  27  We can replicate this regression for ethnicity with the same set of controls, except that the occupation, age groups, and children under 2 variables now interact with the ethnic minority variable. Where  (6) ln  ∝  h  =  ∗ 1 0  h  ∗  person does not belong to white ethnic group person belongs to white ethnic group  With this specification, the conditional gap for ethnic minorities averages around -11% and is again significant at the 1% level.

Based on OECD Labour Force Statistics, UK rates of female participation are second only to Canada across the G7, having recently overtaken the US. Chart 1: G7 female participation rates Per cent  70  60  50  40  30  20 1976  1980  1984 Canada  1988 France  1992  1996  2000  Germany  Italy  2004  2008  Japan  2012 UK  2016 US  Sources: ONS Labour Force Survey, OECD Labour Force Statistics and Bank of England calculations. 7 This paper does not aim to produce better estimates of the gender and ethnicity pay gaps than the official ones published by the ONS. ASHE data is the best source for estimating the overall gaps, but the LFS has a rich set of individual and job characteristics allowing the type of analysis showcased here. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  The increase in female participation has been accompanied by an opposite trend among the male population, which has fallen from 70% to 65% over the sample. In other words, the gender “participation gap” between males and females in the UK has fallen by around 10 percentage points over the past 25 years, though it remains positive at around 8 percentage points. The participation of ethnic minorities in the UK labour force has also been on an upward trend since the 1990s, reaching around 64% in 2019.
The fiscal deficit, on the other hand, represents a significant hurdle as it is currently about double the 3% of GDP limit. Related to the deficit is the size of the public debt, which exceeds the 60% threshold. The main determining factor in the timing of the adoption of the euro, therefore, is the speed with which fiscal consolidation can be achieved, bearing in mind that the euro area will not technically be in a position to accept newcomers before 2007. If the Government embarks on the relatively fast track of fiscal consolidation implied by Malta’s Pre-Accession Economic Programme, we would need to enter ERM II in 2005. Should this track be chosen, however, it would be vital that the planned pace of consolidation be maintained. In this way the benefits of an early adoption of the euro would be reaped, and the lira’s stay in ERM II would be  BIS Review 50/2003  5  smooth, with no noticeable shocks in the transition from the current basket system to the single currency. If, on the other hand, there are slippages in the rate of fiscal consolidation, the stay in ERM II would have to be prolonged and the adoption of the euro postponed. This would attract negative attention from the international financial markets, resulting in a reduced credibility of our economic policy and in pressures on the exchange rate and the interest rate.

Or might there be reasons for Sweden and other countries to specially design our own solutions, over and above those imposed by international regulations? Lending and house prices in Sweden relatively unaffected by the crisis One area where Sweden stands out in comparison with many other countries, is the development of house prices and household indebtedness. As I noted earlier, house prices  1  See, for instance, the report “An assessment of the long-term economic impact of stronger capital and liquidity requirements” by the Basel Committee and the Financial Stability Board (http://www.bis.org/publ/bcbs173.htm). BIS central bankers’ speeches  1  in many countries have fallen heavily after being pushed up in a credit-driven boom over a number of years. In Sweden, too, house prices and lending to households have risen substantially. But here we have not experienced any corresponding fall in housing prices in connection with the crisis; we can just distinguish a minor dent in the curve (Figure 1). Lending to households has also continued to increase rapidly. It has been profitable for the banks to fund the increase in Swedish mortgage borrowing in the international capital markets. Funding in foreign currency has shown an increase trend (Figure 2). This has meant that Swedish households have been able to obtain mortgages at a lower cost and probably to a greater extent than would otherwise have been the case. But this method of funding is not entirely without risk.