samchain/econo-pairs-v1 huggingface dataset:
Figure 3: Actual MPR versus Taylor rule (†)  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  -0.5  -0.5  -1.0  -1.0  -1.5  -1.5 2010  2011 Lag  2012 Inflation  2013 GDP  2014 2015 Shock  2016 D(MPR)  2017 2018 Taylor rule  (†) Source: Central Bank of Chile. Figure 4: MPR Chile vs US (†)  9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0 2000  2002  2004  2006  2010  2008  2012  2014  2016  0 2018  CHL: Monetary Policy Rate US: Fed Fund Rate (†) Sources: FRED and Central Bank of Chile. Some key factors supporting the roles of ER as a shock absorber of financial and commodity price shocks A flexible ER regime is not a form of snake oil to alleviate any sort of global ailment. ER volatility can, of course, generate major wealth shifts, and even solvency problems to agents with large balance sheet mismatches—including government. They can induce major losses in competitiveness, which may harm overall activity if winners fail to capture benefits as fast as 6  losers realize costs. Constituencies around fixed prices—including the ER—are very concentrated and powerful.

The figure illustrates this pattern, showing a significant response of the Chilean 3  peso but a non-significant movement in long-term bond prices. The opposite results hold for Mexico.2 Similarly, the response at country-group level also indicates differences when an US MP shock hits other countries' MP rate decomposed into expected MP rate and term premium (see Table 1). Whereas in AEs the adjustment mechanism is mainly through expected MP rate, the transmission in EMEs is via the term premium. ER comes out as more reactive in AEs rather than EMEs, presumably because central banks in EMEs are less prone to conduct sterilized FX interventions, aiming to—partially—stabilize interest rates and the ER simultaneously. Table 1: US MP spillovers (†)  10-Year interest rate Expected interest rate Term premium FX depreciation  Advanced economies 2003-2016 Post Nov.08 0.335*** 0.429*** 0.331*** 0.234*** 0.005 0.196*** 7.50*** 10.920***  Emerging economies 2003-2016 Post Nov.08 0.293*** 0.557*** 0.054 0.136** 0.239*** 0.421*** 3.520*** 6.660**  (†) The country sample includes 12 EMEs and 12 AEs. The panel regressions use daily data from Jan-03 to Dec-16. The units represent effects in basis points (bp), for a US MP shock of 1 bp. (***) p<1%, (**) p<5%, (*) p<10%. Source: Central Bank of Chile. Of course, a flexible ER also facilitates the reallocation of economic activity between the tradable and non-tradable sectors by speeding up the adjustment of relative prices.
4  BIS central bankers’ speeches  This is of course an attempt to take the argument to its extreme. Monetary policy has constantly been aimed at bringing inflation back on target and creating conditions for longrun stable growth in the Swedish economy. The reason why the Riksbank has conducted the policy it has conducted is that it has tried to reduce the risk of excessive debt and overly inflated housing prices. Swedish household debt has shown a sharp upward trend over the past 15 years or so and is now very high, both from an historical and an international perspective (see Figure 5). If housing prices were for some reason to fall heavily in a situation with high debt levels, households would find that their earlier calculations no longer held and that their balance sheets did not look the way they expected. This could in turn start a process whereby households try to get rid of some of their debt.

At some point the "insurance premium" becomes too large, but I do not think this can be said to have happened yet. 17  For a comprehensive survey of the valuation of the Swedish housing market, see Sørensen (2013), in which the following conclusion is drawn (p. 71-72): “[A] cautious reading of the evidence gives reason to expect downward pressure on Swedish real house prices in the years to come. And if the Swedish economy were to be hit by a large negative shock, the downward adjustment of house prices could become more rapid than the analysis … would suggest.”  18  See Dagens Industri (2013b). 19  Bernanke (2010) describes the difficulties experienced by the Federal Reserve in determining whether or not the housing market in the United States was over-valued. 20  Similar ideas can be found in, for instance, Blanchard, Dell’Ariccia and Mauro (2013), p. 7: “[G]iven what we have learned about the costs of inaction, higher type I errors (assuming that it is a bubble and acting accordingly, when in fact the increase reflects fundamentals) in exchange for lower type II errors (assuming the increase reflects fundamentals, when in fact it is a bubble) may well be justified.”  8  BIS central bankers’ speeches  Are better instruments than the policy rate already available? The third question concerns the access to other tools than the repo rate for managing risk. Those who are critical of using the repo rate claim that there are already other and bettersuited instruments available.
Speech  23 September 2021, 5.30 pm  Fifth Karl Brunner Distinguished Lecture Introduction of Carmen M. Reinhart  Thomas J. Jordan Chairman of the Governing Board Swiss National Bank Zurich, 23 September 2021 © Swiss National Bank, Zurich, 2021  Page 1/4  Ladies and Gentlemen  Good evening. My name is Thomas Jordan and I am the Chairman of the Governing Board of the Swiss National Bank. We are very pleased to welcome you all to the fifth edition of the Karl Brunner Distinguished Lecture. We are delighted and honoured that Carmen Reinhart has accepted our invitation to give the lecture. This lecture was planned for September 2020, but had to be postponed by one year due to the pandemic, with the hope of welcoming Carmen and all of you in person here in Zurich. Given the still difficult situation with coronavirus, this has unfortunately not proven possible. Consequently, the fifth Karl Brunner Distinguished Lecture now takes place in a virtual format. The Swiss National Bank established this lecture series in commemoration of the Swiss economist Karl Brunner, who was one of the leading monetary economists of the twentieth century. Our aim is to contribute to the public debate on questions related to our mandate, by inviting prominent academics whose research is relevant to central banking. Carmen Reinhart is one of the most cited economists in the world, with contributions that cover a remarkable variety of topics, including financial crises, exchange rate policies and public debt.

On the domestic front, the speed, forcefulness, adaptability and comprehensiveness of the economic policy response has been key to reducing costs in the short run and preventing even more extreme and adverse scenarios. It will probably also be crucial in containing medium and long-term damage. In addition, it is worth emphasising the complementarity of the monetary policy measures and those adopted both by fiscal and by prudential authorities, which have significantly reinforced each other. An opportunity for multilateralism But beyond domestic policy efforts, this crisis has demonstrated that, in a highly globalised world, internationally coordinated action is of the essence both during the recession and, more importantly, with a view to the recovery. And this is particularly the case in Europe, given our high degree of integration. Although the crisis has affected sectors and countries differently, the economic policy response must be global in nature. First, on the health front, the crisis will not be over until immunity against the virus has been achieved worldwide. In this respect, the support of multilateral institutions is essential to accelerate the pace of vaccine rollouts in low-income countries. Second, on the economic front, we are witnessing sizable divergences in the rate of recovery across economies. In particular, poorer countries face tougher challenges easing lockdown measures and, at the same time, have more limited policy space to support the recovery. A premature tightening of international financial conditions would be particularly harmful for them, putting their recovery at risk and potentially leading to social and geopolitical tensions.
It must be noted that this occurs in the context of high inventory buildup towards the end of 2018 and the increased uncertainty surrounding the external scenario. In any case, the other part of investment—construction and other works—has remained dynamic and forward going forward signs are still positive. On one hand, related stock market data point to a favorable development. On the other, the large-scale investment projects that are currently in progress—especially in mining—do not register delays and have been unfolding according to plan. Along the same lines, the various surveys of investment projects have not seen any downward and continue to foresee larger amounts for 2019-2020, compared with the amounts invested in the period 2017-2018 (Figure 8). Turning to concessions, the authorities have announced a significant increase in them as from 2020, in particular in hospitals, roads and airports. Add to this the announced approval of a set of complementary works that will be executed in 2019 and 2020. The information of the Association of Engineering Consulting Firms (AIC) for the first quarter of 2019 shows that detail engineering—which covers projects scheduled for one or two years ahead—shows high annual growth rates. In terms of housing investment, although it began the year with a zero contribution to construction GDP, sales remain high and the outlook reflected in the May Business Perceptions Report is positive. In any case, the Monthly Entrepreneurs Confidence Index (IMCE) for the construction sector posted a decline most recently but is still higher tan its all-time average.

Regarding inflation, the Board estimates that the risks are unbiased. The updating of structural parameters has a significant degree of uncertainty, particularly due to the macroeconomic effects of immigration. On the one hand, it is possible that the absorption of immigrants into the labor force is associated with a productivity fall that is more persistent, causing a lower potential growth in the projection horizon, a narrowing of the activity Page 7 of 18  gap and, therefore, higher inflationary pressures. On the other hand, it can happen that the increase in the labor supply occur with greater intensity, which would push up potential GDP growth, widen the activity gap, and reduce pressures on wages and prices. It should also be considered that the negative balance of external risks has exchange-rate effects that could raise short-term inflation beyond our current estimate (Table 5). Summing up, the evaluation of the macroeconomic scenario and its outlook, which include the updating of the structural parameters and the recent evolution of the economy, pointed to the need to recalibrate the monetary impulse. Consistent with this, we decided to cut 50 basis points off the MPR, taking it to 2.5%, in our Meeting of last Friday. We estimate that, by keeping this rate until we see clear signs of an upturn in inflation, it will be possible to ensure the convergence of inflation to the target, in a scenario where the capacity for long-term growth is strengthened by the immigrants’ contribution.
But few would doubt in retrospect that the shift away from manufacturing to a higher value-added service-based economy has been beneficial and that it would anyway have been inevitable eventually. There would have been little advantage in trying to slow the process through actions of monetary or exchange rate policy. In other words, the long-term equilibrium path of the real rate is not necessarily flat. The trend path may, at any particular moment, be up, down or flat, while the actual rate constantly diverges from its equilibrium path because of random events such as unforeseen movements in nominal exchange rates or in cost and price levels at home or abroad, or because of the failure of market adjustment processes to work quickly enough. All of this can be quite aptly illustrated by looking at the path of the Hong Kong dollar's real rate since it was first pegged. The natural trend appeared to be upward, though not smoothly so, for the middle period of about ten years, but there is nothing here which tells us what will, or should, be the path from hereon. Against this background, monetary policy may not be expected to achieve much for competitiveness. But policy makers nevertheless have to choose. Should a fixed or floating rate be preferred? Fix or float? In theory, an advantage of floating is that it may allow for the nominal exchange rate to adjust continuously and precisely so as to keep the real rate at equilibrium - an ideal situation if achievable.

The dosage of the drug may be increased as dependency rises, but eventually a fairly severe anti-dote of austerity may need to be administered to break the growing addiction. It may reasonably be argued, however, that, even if the underlying path of the real exchange rate is determined essentially by structural forces within the economy, monetary policy should be utilised so 1  In fact it is necessary to take into account all one's trading partners and thus arrive at the real trade-weighted or "effective" exchange rate - the REER. For ease of exposition, however, only the term "real exchange rate" is used in this paper. 2  The precise interpretation depends crucially on the set of prices or costs which is used in the calculation, but this aspect is not addressed here. 2  BIS Review 17/2002  far as possible to prevent excessive divergences from trend which may prove damaging to the economy. For example, if a currency is artificially strong for a prolonged period, a particular sector of the economy may become so damaged that it is incapable of recovering when the exchange rate eventually returns to equilibrium. In practice, however, it is extremely difficult to determine, at the time, whether a particular movement in the real rate represents a divergence from the equilibrium path or a fundamental shift in the path itself. At various moments over the past 20-30 years there may have been calls for a weaker HK dollar in order to preserve the local manufacturing sector.
Philipp M Hildebrand: Albert Gallatin, one of the financial founding fathers – what can we learn from him today? Speech by Mr Philipp M Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Swiss-American Chamber of Commerce, Geneva, 10 September 2008. I would like to thank Signe Krogstrup for her valuable support in drafting this speech. I also thank Rita Kobel and Urs Birchler for their very helpful comments and discussions. * 1. *  *  Introduction  As always, it is a great pleasure to be in Geneva. I want to thank the Swiss-American Chamber of Commerce for its kind invitation. My remarks today are unusual in the sense that I will not structure them around monetary policy, the ongoing financial turmoil, or any other current monetary topic. Instead, I have the privilege to step aside temporarily from my day-to-day preoccupations and indulge in a little bit of history about a remarkable man whose origins are firmly rooted in Geneva’s beautiful “vielle ville”. Ladies and Gentlemen, it is an honor for me to pay homage to Albert Gallatin – the Geneva-born fourth – and to this day longest – serving United States Secretary of the Treasury. 1 Those of you who enjoy economic history will be familiar with the extraordinary accomplishments of Alexander Hamilton, the first Secretary of the Treasury, appointed by President George Washington in 1789. Hamilton built the foundation of the U.S. federal financial system in the late 18th century.

You will find our detailed explanatory evaluations regarding the base effect and its effects on 2010 inflation outlook in a box under the third chapter of the Inflation Report to be posted on our website shortly. I strongly recommend that you read these evaluations carefully. The fact that inflation is expected to stay at elevated levels for some time due to tax adjustments and strong base effects highlights the importance of expectations management. In this respect, with the awareness of these temporary factors, it is critical that economic agents focus on the medium-term inflation trend, and therefore, take inflation targets as a benchmark for their pricing plans and contracts. I would like to emphasize once more that any new data or information regarding the inflation outlook may lead to a change in the monetary policy stance. Therefore, assumptions regarding future policy rates underlying the inflation forecast should not be perceived as a commitment on behalf of the CBT. 4. Risks  Distinguished Members of the Press, In the last part of my presentation, I would like to talk about the risks with respect to the inflation outlook in the upcoming period and provide some information pertaining to the probable monetary policy strategy should these risks materialize. The outlook for the domestic economy and the risks thereto has been largely shaped by global developments in line with the intensification of the global crisis as of the last quarter of 2008.
One way of doing it is to calculate the average expected future real interest rate, which provides a benchmark if nothing else. Figure 12 shows how an estimate of the Swedish long-term real interest rate has moved since the mid-1990s until now. 20 According to this estimate, it was around 1.5–2 per cent in the middle of the 1990s. Since then, it has shown a downward trend to around −1 per cent. This downturn is primarily due to a trend decline in international interest rates. Figure 12 also shows that the long-term real interest rate has fallen in large and important economies such as the euro area, the United Kingdom and the United States. The Swedish long-term real interest rate followed the level of the euro area fairly closely until the financial crisis in 2008–2009, after which it has been a little higher. There are several reason why international real interest rates have shown a falling trend. At an overall level the willingness to save has increased more than the willingness to invest, which has meant that the long-term real interest rate has fallen. The former Federal Reserve Chairman Ben Bernanke pointed to the increasing saving in China and other Asian countries as one reason for the global increase in savings, partly because of deficiencies in the social insurances systems in the rapidly-growing countries.

Anita Angelovska Bezhoska: Efforts for further development of the financial education and improving the financial literacy among the population Address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, at the Meeting with the Teaching Staff on the Occasion of the European Money Quiz, Skopje, 22 February 2019. * * * Dear Deputy Minister of Education and Science, dear President of the Macedonian Banking Association, dear teachers, dear guests, First of all, please allow me to greet and welcome all of you here in the National Bank. This is the first such meeting, which I hope will become a regular practice in the future, within our efforts for further development of the financial education and improving the financial literacy among the population in our country. The global financial crisis that arouse from the deficient regulation of the financial system, as well as from the poor financial knowledge of the population, clearly emphasized the necessity for additional efforts in the financial education segment. Therefore, in the global context of the postcrisis period, the policy-makers, including central banks, undertake numerous activities, making financial education an integral part of central banking operations. Being aware of the importance of financial literacy, both for each individual and for the society as a whole, the National Bank has been undertaking activities in the field of financial education for the younger population for many years, and many students from primary and secondary schools, of course, together with their teachers, have already visited our bank.
The Riksdag (2014), Finansutskottet utser toppnamn för att utvärdera Riksbankens penningpolitik. [The Committee on Finance nominates prominent persons to evaluate the Riksbank’s monetary policy] (In Swedish), Press Release, June 17. Rosengren, Eric S. (2015), Changing Economic Relationships: Implications for Monetary Policy and Simple Monetary Policy Rules. Speech on 16 April. Federal Reserve Bank of Boston. Schück, Johan (2015), 2 procents inflation är ett orealistiskt mål. [2 per cent inflation is an unrealistic target] (In Swedish), Column, Dagens Nyheter, 8 May. Stein, Jeremy C. (2013), Overheating in Credit Markets: Origins, Measurement and Policy Responses. Speech on 7 February. Federal Reserve Bank of St. Louis. Sydsvenskan (2015), Sikta lägre Ingves. [Aim lower, Ingves] (In Swedish), Editorial, 4 September. Williams, John (2009), Heeding Daedalus: Optimal Inflation and the Zero Lower Bound. Brookings Papers on Economic Activity, no.2, s. 1–37. Winsth, Annika and Isaksson, Torbjörn (2015), Låg inflation gynnar Sverige. [Low inflation benefits Sweden] (In Swedish), Debate article, Dagens Industri, 2 February. 12  BIS central bankers’ speeches

And it is also probable that the buildup of leverage and bad debt itself would have been significantly restrained in the years before the crisis by the discipline imposed by shareholders and bondholders aware that they stood first in line to bear losses if the banks failed. We not only have to follow through domestically. There is further work to do to ensure that we can not only manage the failure of a bank large enough to be systemically significant in one jurisdiction, but that we can manage the failure of large, internationally active banks. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Again, if we want better options than bailout or insolvency, we need to continue working now, internationally, to put those options in place. This of course requires trust and cooperation between the home authority for the group and the host authorities of the jurisdictions in which it has major operations. But trust and cooperation, while necessary conditions, are not in themselves sufficient. Home and host authorities needs to agree, in advance, on the resolution strategy for a major cross border banking group. Hosts need to be confident that the chosen strategy is viable and that it will respect their own financial stability needs. In other words, confidence that local operations will not be cut loose in resolution and that, if necessary, hosts have the ability to draw down loss absorbing resources through the parent. We have made very significant progress in agreeing international standards on resolution.