samchain/econo-pairs-v1 huggingface dataset:
Indeed, the volume of global FDI has almost quadrupled since 1980, a much faster progression than world trade, which barely doubled. For the FDI host countries this has meant not only an increase in output and employment, but often also a transfer of technology and know-how that has considerably strengthened their economies. In this respect, the experiences of Ireland and Portugal immediately spring to mind. Thus, failing to compete in a globalized world is likely to result not merely in lower sales but, more importantly, also in less investment and, therefore, in weaker growth prospects. In sum, globalisation implies increased opportunities but also risks. The opportunities cannot be seized and the risks minimized, however, without an appropriate strategy. For this reason many countries are to-day actively engaged in improving their market positioning and their cost structures relative to their competitors in order to exploit opportunities for increasing their value added. Some of the more interesting dynamics engendered by globalisation are taking place at the regional level. Economic integration is proceeding rapidly in Europe, Asia and the Americas and, as a result, the region rather than the nation state is gaining pre-eminence as the locus for policy-making in the political sphere and for investment in the economic sphere. Regional integration is, therefore, rapidly becoming a key vehicle for gaining access to world markets and for attracting foreign investment. There is a growing realization that countries which remain outside of regional alliances are likely to become increasingly marginalized.

Are we doomed to end up like the ancient civilisation dwelling on Easter island, which prospered for hundreds of years, living off a tree whose reproductive cycle exceeded the life-time of an individual, and for which reason no one had ever bothered to replant as existing trees died off? The second question probably provides a clue towards understanding the issue surrounding the first. If a section of society makes a sacrifice to reform, the benefits derived in the process may accrue to the rest of society in a greater proportion than to the people making the sacrifice. The obvious solution to this dilemma would be for all sectors of society to share in the costs and benefits of reform in an equitable manner. And this is where Government and all the other social partners have a crucial role to play. It is to take the lead in agreeing on a programme of reforms and carrying their respective constituencies with them. The Malta Council for Economic and Social Development could, I believe, provide a congenial forum for this purpose. But try we must because the challenge is a formidable one and we should not labour under any illusion that it can be wished away. This is not a time for carrying on as usual. Nor is it a time for behaving as though the universal laws of economics or current world realities do not apply to us.
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I am not saying that inflation is not a concern for Asia. But I believe it is more important to address the harm that might be caused by asset-price bubbles. Although I agree it is difficult to predict the occurrence of an asset-price bubble, I am certain that once a bubble is created, it will grow with immense power and suppressing it will be difficult. The bigger the bubble, the greater the devastation it will cause when it bursts. The best way to avoid the damage and heavy cost is to prevent the occurrence of a bubble or to contain it before it’s too late. To do this, we have to make decisions at the early stage of a bubble’s formation, not later. More importantly, when a bubble is taking shape, we have to take appropriate and effective steps to stop it getting too big. Prudent risk management 7. The current extremely loose monetary policies around the world and the large inflows of funds provide an ideal environment and provided nourishment for the formation of asset-price bubbles in Asia. So the risk of asset-price bubbles is not small. But Hong Kong cannot raise interest rates as it wishes, and even if we could, this would attract more hot money with undesirable consequences. So Hong Kong, like many other small and open economies, has to resort to other means to prevent the bubble from growing too large. 8. So what methods and tools should we use?
When monetary policy is constrained at the zero lower bound for interest rates, being able to purchase agency MBS seems like a good tool to have available. I am also a bit baffled by the conclusion that the Fed should “consider larger and looser caps, possibly specified in terms of quarterly rather than monthly changes, with caps perhaps removed completely by 2019.” It seems to me that the current process of balance sheet normalization is proceeding very smoothly. We placed caps on redemptions because we wanted to limit the potential for market disruption that might occur if the amount of securities that had to be absorbed by private markets fluctuated unduly. The cost of the caps in terms of delaying the shrinkage of the balance sheet is very low. Even if the caps were to be removed completely at the end of 2018, it would most likely pull forward the timing of normalizing the balance sheet size by only two quarters. The delay due to the caps is small because, when they are fully phased in, they are likely to be binding only for Treasuries and then only in the middle month of each quarter. While I don’t agree with some of the broader conclusions of the paper, I do agree that a healthy skepticism about event studies is warranted. The major theme of the paper is that event studies that have sought to measure the impact of the Federal Reserve’s three major LSAP programs are flawed for a number of reasons.

The third problem with event studies is the difficulty in disentangling the various factors behind 2/3  BIS central bankers' speeches  the moves in long-term yields. If an open-ended LSAP program pushes back the perceived timing of short-term rate hikes, it will be difficult to apportion the impact on long-term yields between LSAPs and an expectation of a flatter path for short-term rates. These conclusions argue for putting less reliance on event studies to measure the impact of LSAPs, rather than more. In this regard, I would advocate taking a different tack: rely more on an evaluation of bond term premia to assess the potential impact of LSAPs. Bond term premia currently are unusually low, and I suspect that LSAP programs here and abroad have been an important factor. Evaluating the factors that have been affecting bond term premia over time might be a good alternative way of estimating the impact of LSAPs. To sum up, while the impact of LSAPs on long-term bond yields is likely lower than what is implied by some of the event study literature, this does not mean that LSAPs aren’t a useful tool when the FOMC is constrained by the zero lower bound. LSAPs can not only narrow bond term premia, but also make forward guidance more credible. Thus, LSAPs remain useful to have in the toolkit for those times when the short-term interest rate tool may not be available. 1 Lorie Logan and Paolo Pesenti assisted in the preparation of these remarks. 3/3  BIS central bankers' speeches
For example, in Ireland and Spain, banking sector difficulties have necessitated bail-outs by the governments concerned. This led to sovereign downgrades which in turn increased the government  BIS central bankers’ speeches  1  borrowing costs, in some cases to unsustainable levels. All these problems were compounded by instability in financial markets and volatility in sentiment. Chart 1 shows that prior to the formation of the monetary union yields started to converge – regardless of the fiscal position or economic fundamentals – and then stabilised within a fairly narrow band during the first years of the euro until the crisis of 2009. Many countries failed to reduce the debt to GDP ratio during this period as shown in Chart 2. The market’s focus and sentiment changed drastically in 2009, by giving full recognition to the importance of fiscal sustainability, such that yield spreads widened sharply. Market complacency turned into market volatility, and it is only lately that this has been somewhat mitigated after the announcement of the OMT programme, a subject that I will come back to later. Fiscal excess and inappropriate banking practices were not the only causes of the crisis. There was also an erosion of private sector competitiveness, as shown by the relative increase in unit labour costs in several of the weaker economies (see Chart 3). In many countries, the deterioration in competitiveness was the result of wage increases that were not matched by higher productivity.

The “Large banks” panel shows results for all banks with total assets of £ or above, and separately calculated results for all banks with total assets of £ or above. For both of these definitions of “Large”, results are separately calculated using six definitions of distress: 1) Distress defined as receiving worst possible supervisory rating between July 2007 and December 2008; 2) receiving worst possible supervisory rating between July 2007 and December 2009; 3) any instance of default, receipt of state aid, or merger with or acquisition by another bank under stressed conditions between July 2007 and December 2008; 4) any instance of default, receipt of state aid, or merger with or acquisition by another bank under stressed conditions between July 2007 and December 2009; 5) meets definition 1 or 3; 6) meets definition 2 or 4. Similarly, the “Small banks” panel shows results for all banks with total assets of less than £ and results for all banks with total assets of less than £ in each case using all six definitions of distress. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10  Figure 2: Illustration of a graduated prudential framework Under a graduated prudential framework, the regulatory rules a firm faces would widen and become more complex as a firm grows larger and/or undertakes a wider range of activities that are more complex, converging eventually on the Basel standards, as illustrated by the following diagrams.
Under normal circumstances, supply shocks are expected to have a temporary impact on relative prices, not changing the course of medium-term inflation. Nevertheless, the emergence of multiple shocks at the same time and their persistence for a considerable period aggravated the risks on pricing behavior. In fact, the research conducted by the Central Bank staff indicates that economic agents increasingly focus on past inflation while forming their inflation expectations. After evaluating the said developments, the Central Bank concluded that the increases in food and energy prices in recent years reflect a structural change stemming from the global economic environment. In other words, these shocks are likely to prevail for a longer time period, contrary to previous forecasts. There is no clear evidence at this point that this trend will reverse in the short term. Moreover, our revised projections suggest that even with the maintenance of a cautious monetary policy stance for the foreseeable future, reaching the 4 percent target is going to take an extended period of time. Dear Guests, In light of these evaluations, the Central Bank of Turkey announced the framework of its monetary policy for the upcoming period in the April 2008 Inflation Report and in the letter on inflation targets that was sent to the Government on June 3, 2008. The first pillar of the monetary policy framework is the target revision.

The gradual increase of the capacity utilization rate in economy, as reported by business surveys, shows that there is more room at the current juncture for increasing private investment. Fiscal policy has been more prudent in 2010 owing to the narrower room for fiscal expansion and the public debt approaching the threshold of 60% of GDP. Despite the public sector’s positive contribution to sustaining economic activity, the fiscal indicators point to its lesser impact on economic growth. The Government’s prudent approach in the first eight months of 2010 in view of meeting the planned deficit figure for 2010 actualized in the annual reduction of public expenditure and budget deficit. The latter amounts to ALL 23.2 billion, which is within the projected figure in the budget and about 51% lower than in 2009. The 2010 state budget revision in July, which established the reduction of expenditure and budget deficit by 10% and 23%, respectively, is an expression of the fiscal authority’s firm commitment to safeguarding economic stability and ensuring fiscal sustainability in the long run. The high growth rates of exports and the contained performance of imports yielded a positive contribution of foreign demand to economic growth in the second quarter of 2010. Foreign trade data on July and August attest to moderate annual growth rates of exports and positive annual growth rates of imports, hence leading to higher trade deficit in this period.
You can see that reflected in the IMF’s forecasts for world growth. In every one of the last five years the world economy has underperformed the forecast.3 Indeed it has pretty much become an annual event that the world economic growth forecast is downgraded as stresses emerge somewhere in the world economy or there are serial disappointments on pay and productivity. This is not to denigrate the IMF’s forecasters. You see the same effect in the Bank’s own forecasts and in private sector forecasting. For example, the Bank’s growth forecasts made in 2010 were derailed by the euro-area crisis. These outcomes are a combination of not understanding at the outset how slow the healing process from the 2008 crisis would be and subsequent unforeseeable and unfortunate events. Secular stagnation story There is another rather different story however, one more reminiscent of our friend the mythical boiled or frozen frog. In this other world, we are not on a slow healing path, subject to a series of unfortunate events. Rather, there are deep secular and structural forces pushing down on our economies. These began to have an impact before the financial crisis. But their effect was masked somewhat by stimulative effects of the financial sector bubble as it inflated and was only exposed in the post-crisis world. In this story there is recovery from the crisis, of course, but it is recovery to economies with both considerably weaker growth potential and considerably greater vulnerability to shocks.

That is less than the average growth rate of nearly 3% in the decade before the crisis but around the average growth rate in the last 60 years. It will, according to the OECD, be the fastest growth rate among G7 economies this year. Over the period, inflation has been pushed down to around zero by the strength of sterling and by the very sharp fall in the oil price. I hesitate to describe the oil price fall as an “unfortunate event”. Much of the fall is the result of an increase of supply, the product of the oil investment cycle that accompanied oil prices staying at over $ per barrel for much of the last ten years. That will have boosted consumption and supported growth in oil-consuming countries like the UK. But the speed and size of the fall has made the shock to inflation very abrupt and exposed weaknesses in oil-producing economies. And more worryingly some of the fall over the last 18 months has been due not to an increase in supply but rather to slowing demand in emerging markets especially China. This will have had an adverse effect on world growth. There are continued signs of strength in the UK economy. Consumer confidence is near record levels and business investment intentions are strong. Housing market transactions and investment are picking up. Credit has picked up and is growing around the rate of GDP. On pre-crisis metrics, there are signs of tightening in the labour market.
The chart shows labour costs in Norway compared with trading partners, calculated using a common currency. The real exchange rate measured by relative labour costs in a common currency is an expression of the cost competitiveness of Norwegian companies. The real exchange rate has varied considerably over time. Nevertheless, there has been a tendency for the real exchange rate to revert to earlier levels. The point for 2006 shows the real exchange rate with the wages projections for 2006 presented in the latest Inflation Report and the exchange rate level so far this year. The real exchange rate has been stronger in recent years than in the latter half of the 1990s, largely because of a stronger nominal exchange rate. The corollary to this is a marked improvement in Norway’s terms of trade. The sharp rise in prices for oil and other Norwegian export products have contributed to the appreciation of the krone in recent years. The real krone exchange rate has appreciated because the Norwegian economy is faring well. Developments in the real krone exchange rate do not provide a full description of competitiveness. Relative hourly labour costs are taken into account, but not productivity growth. If higher relative hourly wage growth in a country partly reflects higher productivity growth, an appreciation of the real exchange rate by this measure will not necessarily imply a deterioration in competitiveness. The analyses in Inflation Report 2/2006 point towards a relatively stable exchange rate and somewhat higher wage growth in the next few years.

As a result, the real exchange rate will remain at a relatively high level. With a reasonable degree of certainty, it can be said that the nominal exchange rate will swing more than that implied by our projections. Given the other assumptions in the Inflation Report, our best projections for the coming years is that the krone will hover around this level. It is not easy to project the nominal exchange rate, but perhaps we can provide an indication of the movement in the real exchange rate in the very long term: An economist at Norges Bank, Farooq Akram, has analysed the fundamental equilibrium real exchange rate for the Norwegian krone 1 . He takes into account that a steadily smaller share of our imports will be covered by current petroleum revenues and the return on the Government Pension Fund - Global. 1  Q, Farooq Akram. Oil wealth and real exchange rates: The FEER for Norway. Working Paper 2004/16  BIS Review 90/2006  5  Rough estimates based on this study indicate that the real exchange rate that maintains the trade balance when petroleum wealth no longer accounts for the same share of the economy will be more in line with the real krone exchange rate prevailing in the 1960s - before oil production started. This depreciation can come about either by lower price and wage inflation in Norway than among trading partners or by a nominal weakening of the krone.
The order of priority for these considerations does not dictate the weight the central bank can give to stable output and employment in the short term. Norges Bank does not interpret “high and stable output and employment” to mean that the Commission is advocating that monetary policy should have greater responsibility for stabilising the economy than it does today. Monetary policy cannot have primary responsibility for the level of output and employment. There is broad consensus among economists that monetary policy cannot influence the long-term growth potential of the economy. The level of economic activity, and thereby employment, is a result of overall economic policy, particularly with regard to more structural factors such as wage and income formation, the tax and social security system and the functioning of the labour market. Monetary policy is only one piece of this picture. But monetary policy can make important contributions to stabilising the economy. First, the policy rate can be rapidly adjusted in response to shocks to the economy, as for example in 2008 and 2014. Second, the policy rate has a direct and pronounced impact on many segments of the real economy. This means that as long as there is no conflict with the inflation outlook, monetary policy can be oriented to influence average output and employment over time. Many countries, including Norway, have experienced that employment losses in connection with an economic downturn are not fully reversed following a turnaround; for example, unemployment may become entrenched at a high level or the labour force may be reduced.

This means practicing what you preach, as General Colin Powell advised: “You can issue all the memos you want and give all the motivational speeches…but if the rest of the people in your organisation don’t see you putting forth your best effort every single day, they won’t either.”  6  Catalysing action means listening to and empowering colleagues, who are more likely to follow a new direction if they have been consulted during its development. And it then means getting out of the way. As Teddy Roosevelt said, “The best executive is the one who has sense enough to pick good people to do what [the leader] wants done, and self-restraint enough to keep from meddling with them while they do it.”  7  Such delegation has traditionally been an anathema for central banks. But when following the crisis the Bank of England doubled in size and tripled in responsibilities, we knew our rigid hierarchy had to change. To start that process, we surveyed widely and met with colleagues across the Bank in order to develop our new strategy. We then slashed the number of internal committees by two thirds and instituted a policy that the author of every analysis had to be in the room whenever it was discussed. We’re now devolving decisions to the right level, changing the way we meet and making the Bank more permeable to the outside world by multiplying our channels of communications and the number of our spokespeople.