samchain/econo-pairs-v1 huggingface dataset:
My conclusion from this discussion of Figures 5 and 6 is that the estimate of Sweden’s potential GDP is not reliable and that the output gap is thus not a reliable indicator of resource utilisation. 2  The Federal Reserve Bank of San Francisco has a forecast for the potential GDP of the United States that is very similar to the CBO’s forecast, see Rudebusch (2011). 3  The figure shows the Riksbank’s forecast for the United States’ GDP, but it is very similar to the CBO’s forecast for the United States GDP. BIS central bankers’ speeches  3  I believe instead that the unemployment gap is the most appropriate measure of resource utilisation. There are several reasons for this. Unemployment is measured often and is not revised. GDP on the other hand is measured less often and is highly uncertain, and major revisions are made. Unemployment is also directly related to welfare – one of the worst things that can happen to a household is that one of the members of the household loses his or her job. Unemployment is also the indicator of resource utilisation that is best known and easiest for the public to understand. The preparatory works for the Sveriges Riksbank Act state that the Riksbank should support the objectives of general economic policy. One of the main objectives of economy policy in Sweden is to limit unemployment, for example by improving the functioning of the labour market and increasing the incentives to look for work.

The United States also has substantial structural current account and budget deficits. Sweden has been exposed to a major demand shock with a collapse of exports and a loss of demand in the export sector. Exports are now recovering again. Sweden does not appear to have any structural problems in the finance sector, or in any other sector, and has no structural budget or current account deficits. This being the case, I think one could claim that the development of Sweden’s potential GDP should in fact be better than that of the United States, not worse. The difference in potential GDP underlines the difficulties and the element of arbitrariness in these calculations. Figure 6 compares the Riksbank’s estimates and forecasts for potential GDP from two different points in time, namely September 2008 shortly before the investment bank Lehman Brothers went bankrupt and February 2011. The September 2008 forecast for Sweden’s potential GDP is rather similar to the CBO’s latest forecast for potential GDP in the United States in Figure 5. We can see in Figure 6 that the February 2011 assessment of potential GDP in the longer term is approximately 4 per cent below the corresponding assessment in September 2008. Why should a pure demand shock in the absence of structural problems lead to such a significantly lower potential GDP in the longer term?
The share of foreign currency-denominated loans in the current debt stock of households is rather small compared to other emerging economies, especially those in Central and Eastern Europe. Financial markets seemed to have appropriately appraised these factors, as the risk premium in Turkey deteriorated by a smaller extent when compared to many other emerging economies during the peak of the crisis. Relative stability in financial markets of Turkey has provided our bank more policy space relative to many other emerging economies. The Central Bank of Turkey has used this opportunity to guide expectations. As expectations were further aligned with the policy intentions of the CBT, bond yields decreased to historically low levels. This is an important  BIS Review 123/2009  3  development, because in previous crises real interest would tend to increase, thereby exacerbating the severity of the economic contraction. Current situation reflects the improved effectiveness of Turkish monetary policy and highlights the transformation of Turkish economy. Dear Participants, Turkey has always had a great climate for Green Shoots to blossom. Our recent crisis in 2001 was followed by a strong “V” shaped recovery process. However, despite the signs of partial improvement in domestic consumption in recent months, its strength and durability is questionable. We expect that demand uncertainty and low levels of capacity utilization will continue to weigh down on investment spending and employment. High unemployment will continue to contain private consumption demand and blur the prospects for a solid recovery.

Mr Erçel reports on developments in the Turkish economy in the light of the recent disinflation efforts  Speech by Mr Gazi Erçel, Governor of the Central Bank of the Republic of Turkey, at the American-Turkish Council, held in Washington on 28 September 1999. *  *  *  Two years ago, in the summer of 1997, the crisis in Asia began to accelerate. One year ago, on 17 August 1998 a crisis erupted in Russia that threatened serious consequences not only for the Russian economy but also for the entire international financial system. By comparison, this year’s summer has been uneventful, except my country, which was struck by an earthquake on 17 August 1999. The earthquake has been devastating both in terms of human life and physical infrastructure. The death toll has risen to over 15,000 with over 25,000 injured. More than 200,000 houses were damaged or destroyed and over half a million people were left homeless. The spontaneous and prompt support from the international community together with domestic resources will cover reconstruction costs and we will recover. I have to emphasize that this tragic event will not derail our macroeconomic strategy, nor shall we allow it to jeopardize the hand-won disinflation achievements realized so far. Since Turkey has a long history of inflation, which is the main cause of macroeconomic imbalances, we have directed our efforts to reducing the inflation for quite some time. A disinflation program was launched at the beginning of 1998.
Beige Book summaries reach fewer than 10% of the US adult population. FOMC minutes are accessible to only around 2%. 60  Kincaid et al (1975). The precise algorithm used will have some bearing on the final Flesch-Kincaid score that is computed for a given text. Other metrics of linguistic complexity yield broadly similar results. 61 Kirsch et al (1993). 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  According to OECD studies, levels of literacy in the UK and US are not greatly dissimilar. 62  Assuming the  same literacy rate in the UK and US implies that political speeches are accessible to slightly less than half the population, Dickens novels to around 40% and newspapers to around 30%. Bank of England publications are accessible to less than 10% of the adult population. These fractions are low. Around 95% of the general public are likely to find central bank publications inaccessible. Perhaps unsurprisingly, these tend to be the same segments of society with least trust and understanding of central banks – for example, the young and less well-off. Mainstream media can help mediate, but they have an increasingly constrained reach among those same cohorts. Herein lies central banks’ challenge: a rising tide of central bank communications on the one hand, a retreating tide of public trust and understanding on the other. Conventional means of communicating are unlikely to be able to reach those parts of society for whom mistrust and misunderstanding are most acute.

In the summer of 2013, the MPC provided guidance about the future path of monetary policy. This guidance was aimed explicitly at reducing uncertainty among households and companies, with simple and clear language about the future path of policy. It was accompanied by a communications plan focussed on the general public, including TV interviews and a published document. 43  Shiller (1997). Quoted in Thompson (2016). Sapienza and Zingales (2013). 46 See Haldane (2016). 44 45  11  All speeches are available online at www.bankofengland.co.uk/speeches  11  The Bank conducted a survey after the guidance had been issued, with the aim of assessing its impact on the general public. This painted a mixed picture. The Bank’s message got through to around 75% of companies, but only around one-fifth of households. Moreover, even among those households who heard the guidance, as many felt less confident as more confident about the economy (Table 2). In the US and the euro area, surveys have found a similar lack of understanding of central bank actions. They have also identified where these understanding problems are most acute. In the US, survey respondents with lower incomes or without a college degree are less likely to understand monetary policy. 47  In the euro area, a Dutch survey found respondents with higher education or income were more likely to answer questions about the ECB’s monetary policy correctly. 48  This is a puzzle.
This year will close at 12%, that is, nearly 2 percentage points above the June forecast. Cumulative surprises in volatile prices and the recent depreciation of the peso explain much of this correction. By 2023, on average, projected inflation is about 1 pp higher than in June, reflecting an RER standing between 3% and 4% above its second-quarter average. In addition, it is assumed that it will remain at these more depreciated levels throughout the projection horizon, ending the period above its 15- to 20-year averages. At the same time, the projection considers an increase in second-round and indexation effects, reflecting the higher persistence of inflation. Current levels and the expected evolution of the exchange rate are important factors behind the correction of our inflation outlook over the policy horizon, which more than compensates for the drop in the world prices of fuels, foods, and other commodities. The central scenario assumes that inflation will converge to the 3% target within the twoyear monetary policy horizon. In this projection, annual CPI inflation will end 2023 at around 3.5%, reaching 3% by the third quarter of 2024. Core inflation will see a slower convergence towards 3%, as a result of the strong persistence already noted and a higher RER (figure 11). This stubborn inflation persistence calls for a more contractionary monetary policy —in both nominal and real terms— than foreseen in June, as is summarized in the new MPR corridor in this Report.

In 2005, EU Heads of Government re-launched the Lisbon strategy with an enhanced focus on jobs and growth and a streamlined governance regime. The key elements are the National Reform Programs which cover, for each country, the commitments taken over a 3-years cycle as regards structural reforms. EMU, with a single monetary policy and 12 governments responsible for budgetary policies, requires an institutional fiscal framework. It has to be simple, easy to implement, and able to ensure that fiscal policies are sound and sustainable, to avoid free-riding behaviours as well as neo-ricardian effects. The most widely-discussed surveillance process, because it is the most binding one, is the Stability and Growth Pact (SGP). The Pact may be defined as the “users instructions” for the obligation, defined in the Treaty, for EU Member States, to achieve a medium-term budgetary position of close to balance or in surplus, while maintaining the ratio of the annual government deficit to gross domestic product (GDP) at within 3 % and the ratio of gross government debt to GDP at within 60 %. Member States which do not respect these ratios face an “excessive deficit” procedure which may lead the Ecofin Council to take a series of measures which range from simple recommendations to financial sanctions. In 2005, the European Council agreed to reform the SGP. The important role of the SGP in terms of budgetary discipline is confirmed.
Instead, this caused a significant current account deficit widening. Therefore, in order to preserve the GDP growth trend, economic policies should focus on its sustainability. In the quest for supporting potential growth and increasing the resilience of the economy, there is no substitute for a coherent mix of macroeconomic policies and structural reforms. A durable economic growth is extremely important also from the perspective of euro adoption, as it would lead to progress in convergence, which will put us on the right track for achieving the goal of joining the Eurozone. In order to stay on course, economic growth and convergence must advance in line with economic fundamentals. Otherwise, the gains, as spectacular as they might be, could be jeopardised by abrupt setbacks. At the end of the day, forcing convergence or postponing convergence is equally harmful. I had the honour to be one of the vice-presidents of the National Committee for Substantiation of the National Euro Changeover Plan, founded last year, which prepared a set of documents that emphasise the need for a substantial degree of convergence before entering the euro area. In fact, it is the Maastricht Treaty that explicitly stipulates the need for “a high degree of sustainable convergence”. Yet, this requirement seems to have been overlooked sometimes. Let me point out that by convergence I refer to all four types of convergence that must be taken into account: nominal, real, institutional and structural. Nominal convergence is easily quantifiable, as the specific criteria are clearly defined in the Maastricht Treaty.

But we also have to ensure the compatibility of our institutions with those in the euro area and this is the essence of institutional convergence, a process where the central bank and its independence are 1/4  BIS central bankers' speeches  particularly important. While structural convergence focuses on adapting the structure of our economy to that of the euro area, real convergence, measured by GDP per capita (at PPS) as a percentage of euro area/EU average, is the best proxy for the development level of a nation. Romania has certainly come a long way in terms of economic convergence, a process whose inception is tied to the prospects of EU membership, witnessing a significant increase in per capita GDP as a share of the euro area average (based on PPS), from 31.3 percent in 2005 to 60.4 percent in 2018. Peer countries recorded a similar trend: Bulgaria went from about 33 percent to 47 percent, while Czechia, Hungary and Poland, which started from a more advanced level, added 11 to 23 percentage points to the same indicator during 2005–2018. However, this process is still far from completion in these non-euro New Member States. Talking about real convergence, practical experience has showed us that the Eurozone is not a “convergence club”, as its members did not necessarily improve their real convergence after joining it. The euro area is not a cosy place for economies with lagging competitiveness or rigid markets.
And both loan-level data and aggregates like the Flow of Funds miss an important dimension of borrower behavior that became very important during the crisis and recovery – the relationship between different kinds of credit use by individual borrowers or households. The creation of the Consumer Credit Panel is an example of the use of pre-existing commercial data in an innovative way that had not previously been pursued. The panel is based on credit report data collected by Equifax (one of the three credit bureaus in the United States) and it contains information on all outstanding loans – including mortgages, auto and student loans, and credit card debt – at the individual consumer level. While credit records are primarily used by lenders to evaluate a potential borrower’s creditworthiness and ability to repay, they can also provide a comprehensive picture of outstanding balances and delinquencies and how they interact. Of course, all the data are completely anonymous – the dataset has been stripped of all personally identifiable information. The CCP was created by our research group using an innovative sampling procedure, based on the randomness of the last four digits of social security numbers. The resulting panel allows one to track individuals over time and across different locations within the nation, starting in the quarter in which they establish their credit report when taking out their first loan.

Without those prerequisites, there is a significant risk that innovative and valuable datasets would be underutilized because their availability is not widely known, their reliability is inadequately evaluated and documented, and their use proves too costly, requiring large time investments by each user. In my view, effective data utilization therefore cannot be achieved without adequate recognition, funding, and support of a data steward role. Subject matter experts serving as data stewards have a number of important data management responsibilities. A primary one is the production of detailed documentation of the data sources and content. Such documentation is vital for preserving institutional memory, which can be lost when key personnel leave, and it needs to be updated regularly. This documentation also includes the creation of higher-level metadata that can help potential users determine the applicability of the dataset to their specific needs. Data stewards play an important role not only in documenting the provenance of the data but also  4  BIS central bankers’ speeches  in evaluating the quality of the data, to determine whether it can be trusted for different purposes. The availability of rich documentation on data lineage and usage, combined with high-quality user support, will reduce learning costs for users, lighten the question-and-answer workload for data providers, and promote the efficient allocation of resources.
If one wishes to detect problems in good time, before they develop into a crisis, it is important that the public authorities within a country and those in different countries can coordinate and exchange information. There have been large inadequacies in this field in previous crises. This can to some extent be blamed on confidentiality regulations, and the relevance of these may be questioned during a crisis, but in all honesty it can also be blamed in many cases on the authorities having insufficient interest in collaborating. Tendencies in the financial sector The financial sector is subject to rapid development. The borders between different financial activities are being eroded. Banks are selling insurance-like products and insurance companies are selling banking products. In some cases financial conglomerations are being established. Moreover, the trade in financial instruments has developed to such an extent that the risks are spread to a greater number of agents than before and also spread outside of the banks and insurance companies. Another development is the cross-border integration, particularly in the Nordic countries. Danish banks have established themselves in Sweden and Swedish banks in Denmark. Integration as such is a positive development, for several reasons and not least to increase economic growth. The Riksbank therefore supports measures, for instance within the EU, that lead to greater integration. It is therefore important that the authorities manage the risks that integration might entail to avoid setbacks.

Miguel Fernández Ordóñez: Global rebalancing, asset prices and policy responses Opening remarks by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the Fifth High-Level Seminar of the Eurosystem and Latin American Central Banks, Madrid, 10 December 2010. *  *  *  Good morning and welcome again. More than three years after the global financial system started to show serious signs of instability and two years after being on the verge of a global economic and financial meltdown, the world economy seems to have avoided that risk, backed by a strong and coordinated policy response. Nevertheless, the strengthening has been uneven and the risk of economic and financial instability is still persistent and significant in some regions, like the euro area. Indeed, it is hard to emphasise sufficiently the challenges ahead and how crucial the present juncture is for the future of our Monetary Union. On the contrary, Latin American economies had learned the lessons from the severe financial and economic disruptions they experienced in the not so distant past, and the challenges they currently face are more similar to those that characterised the period of strong growth prior to the financial crisis. These very different sets of present circumstances make today’s exchange of mutual experiences and policy discussion particularly interesting. The title of today’s Seminar was chosen almost a year ago, but it couldn’t be more timely: Global Rebalancing, Asset Prices and Policy Responses.
New services offered by banks on the FX market, such as the prime brokerage, also create difficulties. Under a prime brokerage agreement, the bank makes its credit limits available to other institutions that speculate on the FX market, most frequently to hedge funds. As the product becomes widely used, supervisors are faced with a growing difficulty in monitoring the credit risk and liquidity risk of operations concluded on the FX market, 42 where the average daily net turnover amounts to USD 1,900 trillion. This creates quite a challenge for supervisors, who must have human and financial capital available to properly assess the risk in the increasingly global and complex world of finance. The understanding of the mechanics of financial markets is a never-ending challenge for supervisors. 40  Kapstein E. “Architects of stability? International cooperation among financial supervisors”, BIS Working Papers No 1999, February 2006. 41  Schinasi G. J. “Safeguarding financial stability: theory and practice”, Washington, D.C., IMF, 2005. 42  Kos D. “Developments In the FX Market: New Opportunities, Risks and Responsibilities”, a speech at the “Future of FX” conference in New York, October 24, 2003. BIS Review 60/2006  15  The response of bank supervisors gathered in the Basel Committee on Banking Supervision to the increasing complexity of financial instruments in banks’ portfolios is the New Capital Accord (“Basel II”), which is to replace the regulations currently applicable in over 100 countries.

And last but not least, good governance requires a fair legal framework and impartial enforcement of this legal system that protects property and individual rights and constitutes a strong base for prudent policy-making. The rules need to be preset, predictable and applied equally regardless of whether the parties in dispute are domestic or foreign, individuals or state. Enforcement of rules in speedy and impartial manner would create a self-fulfilling environment, where adhering to contracts voluntarily becomes the norm and there is little need to formally recourse to the legal system. How can we match governance practices with the current financial turbulence? It is too early to make a judgment about the institutional failures that have led to current financial turbulence, but we have a few clues on what went wrong. Lack of transparency and accountability is at the top of the list. In retrospect there were some important gaps in the U.S. regulatory structure that caused poor underwriting and some fraudulent practices in the sub-prime mortgage sector. Parties in the originate to-distribute chain did not have incentives to generate and provide information on the quality of assets. We can add poor investor duediligence practices and poor performance of credit rating agencies to that list. Public disclosures required of financial institutions were not enough to shed light to the risks  2  BIS Review 38/2008  associated with their on- and off-balance sheet exposures. Public authorities were way behind in assessing and regulating the complex financial instruments created by financial engineers.