samchain/econo-pairs-v1 huggingface dataset:
More recently, the EU has responded collectively by, inter alia, imposing severe economic sanctions on Russia. The growing significance of European policies renders all the more important continuing to push on with the development of the European institutional framework. The response to the war in Ukraine must, once again, be more Europe. In this regard, the EU’s recent proposals to increase its autonomy of decision and action in such important areas as energy, technology and the digital arena stand out. It is essential that, in these fields, the policies be designed and implemented so as to minimise the risk of fragmentation within the EU and of undesired distortions emerging. The war in Ukraine will also exert upward pressure on government expenditure, both to mitigate the effects on the most vulnerable households and firms and to cover the reception of refugees and military spending. The current shocks could be tackled more appropriately by strengthening the coordination between countries. The severity of the EU-wide supply shock (amplified after the outbreak of the war in Ukraine), its exogenous nature and the strong cross-border impact of domestic fiscal policies all warrant this coordination. Specifically, a common fiscal response to the challenges posed by the war in Ukraine would be desirable, including pooling the government spending needed to address its effects on the Member States’ economies. Moreover, the European Commission is currently reviewing the European fiscal rule framework.

14  2020 (f) Mar.19 Report  Dec.18 Report  2021 (f) Mar.19 Report  Mar.19 Report  3.25-4.25  3.0-4.0  2.75-3.75  3.0-4.0  2.75-3.75  3.8 3.9 6.0 3.3 4.1 5.0 -2.7 20.9 22.6  3.7 3.9 6.2 3.3 3.6 4.5 -2.9 20.1 21.8  3.3 3.6 3.9 3.5 2.8 3.0 -2.8 20.8 22.8  3.5 3.7 4.3 3.5 2.9 2.9 -2.7 20.3 22.0  3.3 3.5 3.9 3.4 2.9 2.6 -2.7 20.4 22.2  Fig 12 CPI inflation forecast (1) (2) (3)  CPIEFE inflation forecast (1) (2) (3)  (annual change, percent)  (annual change, percent)  6  6 6  6  5  5 5  5  IPoM Dec.18  4 3  IPoM Mar.19  2  4 4  3  2 2  2  1 1  0  0 0 16  17  18  19  20  4  3 3  1  15  IPoM Dec.18  21  IPoM Mar.19  0 15  16  17  18  19  20  21  (1) As from January 2019 the new indexes with 2018=100 annual base are used, so they are not strictly comparable with past figures. (2) Gray area, as from first quarter of 2019, shows forecast.
Svein Gjedrem: On monetary policy and the krone Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to Industrinettverket Sunnhordland, Stord, 7 June 2004. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 26 May, Inflation Report 1/04 and on previous speeches. The charts in pdf-format can be found on the Norges Bank’s website. *  *  *  The primary objective of monetary policy is to ensure nominal stability. There were wide fluctuations in the Norwegian economy in the 1970s and 1980s. Economic developments were marked by high and variable inflation. Inflation rose gradually and it took a long time before it fell. The absence of a nominal anchor was one of the main reasons behind these pronounced swings in the Norwegian economy. With a policy of low interest rates and devaluations, inflation took root. Nominal interest rates were kept at a low level even though inflation and the value of tax- deductible interest expenses rose. Frequent devaluations from 1976 were unable in the long term to prevent a decline in the manufacturing sector. On the contrary, they proved to be self-reinforcing. The wide fluctuations culminated in a credit boom in the mid-1980s, and a rise in costs as a consequence of the spring 1986 wage settlement. A pronounced downturn and high unemployment followed at the end of the 1980s.

The real krone exchange rate as measured in terms of developments in relative prices is an expression of the Norwegian krone’s purchasing power. When the curves in the chart are above zero, the exchange rate is stronger and competitiveness weaker than the average level since 1970. The real exchange rate has fluctuated considerably over time and has deviated substantially from the average level over longer periods. Nevertheless, there has been a tendency for the real exchange rate to revert to this level. In the chart, the point for 2004 shows the real exchange rate with wage and inflation projections for 2004 from Inflation Report 1/2004. In relative prices, the real exchange rate is now about 2 per cent weaker than the average since 1970, whereas it is almost 4 per cent stronger than its historical average measured in terms of relative labour costs. Economic developments Interest rate expectations have been revised upwards in a number of countries. Growth has picked up in the US. As in the second half of 2003, growth is primarily being driven by private consumption and business investment. Following a surprisingly long period of weak labour market developments, employment has begun to edge up and is now higher than at the same time last year. In recent months, inflation has increased from a very low level. As a result, interest rate expectations have been revised upwards, and the key rate in the US is expected to be raised at the end of June.
We have systematised our judgement so that it is possible for others to determine whether the bank’s assessments seem reasonable. The assessment of risk is linked to six factors that are important for 4 price inflation. Our assessment of risk associated with each of these factors is formulated as a probability distribution around the projection for the variable in question. The assessment of risk associated with the actual inflation projection emerges as a weighted average of these six distributions. The weighting of each factor reflects its significance to developments in price inflation as this emerges in our model. Weighting is heaviest and approximately the same for domestic private demand, wage growth, growth in public expenditure and developments in the global economy. The weighting for exchange rate and oil price is somewhat lower. The chart shows our assessment of the balance of risks associated with estimated wage growth as it was presented in the Inflation Report 3/2001. We estimated 5 per cent wage growth in 2003. At the same time, we said that the probability that wage growth would be higher than projected was greater than the probability that it would be lower. We could present similar charts for the other five factors. The ”fan” for the inflation projection is a topographical map of the overall assessment of the balance of risk. 4  The risk model is discussed further in “Box: Assessment of risk to the inflation projection”, Inflation Report 2/2001, Norges Bank.

The plus and minus signs show the extent to which Norges Bank has signalled upside or downside risks. As a reference for the extent of the effect, the lines around the time axis show the average daily absolute change in the three-month money market rate. As from the monetary policy meeting on 21 July 1999, the date of the meetings have been made public in advance. We see that changes in the money market rate are modest in connection with most monetary policy meetings. The money market rate changed by more than 0.20 percentage point in connection with only four of the nearly 30 meetings included in the chart. We have also made similar estimates for a number of other countries in order to have a basis for comparison. The next charts show changes in connection with monetary policy meetings in the European Central Bank, the Bank of England and Sweden’s Riksbank. BIS Review 7/2002  7  The effect is not systematically different from the effects in other countries. If interest rate decisions are largely anticipated, adjustment costs will decline. This is an advantage. What we must be measured against primarily is whether we are setting the interest rate correctly in relation to the inflation target. Guidelines for fiscal policy The fiscal policy stance is a key factor for developments in domestic demand. Towards the end of the 1990s politicians were facing new challenges in the formulation of economic policy.
The projections are based on the assumption that interest rates in Norway and abroad will rise somewhat faster than may be implied by today’s forward rates. Since the previous Inflation Report, the upward movement in Norwegian and international long-term interest rates has become more pronounced. Exchange rate movements are difficult to project. In Inflation Report 1/06, the path for the interest rate in Norway and abroad was assessed to be consistent with an approximately unchanged krone exchange rate. The high rate of economic growth implies that price and cost inflation will edge up after a period. Inflation measured by the CPI-ATE is projected to increase from today’s level of around 1¼ per cent, up to almost 2 per cent at the end of 2007. There are prospects that inflation will increase further and be close to the target of 2.5 per cent three years ahead. With a gradual reduction in unemployment, Norges Bank expects wage growth to edge up. At the same time, it will probably be easier for enterprises to pass on cost increases to prices in pace with the rise in demand and capacity utilisation. Capacity utilisation is now projected to be somewaht higher than its normal level. Mainland GDP is still growing strongly in 2006. Capacity utilisation in the economy is expected to rise over the next two years. Even though a gradual increase in the interest rate will result in somewhat weaker growth impulses after a period, monetary policy will still be expansionary.

Ardian Fullani: Overview of Albania’s latest economic and financial developments Speech by Mr Ardian Fullani, Governor of the Bank of Albania, on the Monetary Policy Decision-Making of the Bank of Albania’s Supervisory Council, Tirana, 31 October 2012 *  *  *  Today, on 31 October 2012, the Bank of Albania’s Supervisory Council reviewed and approved the quarterly Monetary Policy Report. Based on the analysis of Albania’s latest economic and monetary developments, and following discussions on their performance outlook, the Bank of Albania’s Supervisory Council decided to keep the key interest rate unchanged, at 4.0%. The Supervisory Council deems that the current monetary conditions are adequate to meet Bank of Albania’s inflation target in the medium term. Keeping the key interest rate at its minimum historical level ensures the necessary monetary incentive to promote Albania’s domestic demand and economic growth. Let me now proceed with an overview of the economic and monetary developments and key issues discussed at today’s meeting. *** The Albanian economy was faces with a challenging global environment over the first three quarters of 2012 due to difficult situation of the world economy, and particularly of the euro area. Domestically and externally generated supply shocks determined the economic growth profile and continued to test Albania’s macroeconomic and financial foundations. Over this period, the Albanian economy was faced with slow foreign demand growth, increased financial risk premia and tendencies of several financial market agents to reduce exposure to Albanian economy. These developments were also reflected in low consumption and investment levels.
4  BIS central bankers’ speeches  Economic environment and the introduction of the minimum exchange rate Now I’d like to discuss the motivation for introducing the minimum exchange rate. The rate was not implemented to stimulate exports, but rather to ensure that the appropriate monetary conditions prevailed and that the SNB could fulfill its mandate of price stability. The European sovereign debt crisis escalated dramatically in the summer of 2011. It became increasingly evident that, in addition to Italy and Spain being engulfed by the crisis, France also was potentially exposed. At the same time, the debt-ceiling negotiations in the United States and the consequent downgrade of the U.S. by Standard and Poor’s added to the tension. During these months, the Swiss franc appreciated rapidly against all major currencies. This development is shown in Figure 5 for the exchange rate of the Swiss franc against the euro and the U.S. dollar. The increase in the value of the franc, which reflected market panic rather than economic fundamentals, drastically tightened domestic monetary conditions. With annual inflation already close to zero, Switzerland risked falling into a deflationary trap. What policy options were available? The massive Swiss franc appreciation left the SNB with few options to combat the restrictive monetary conditions. As a result of the response to the global financial crisis of 2008/2009, our policy rate was already at the lower bound.

The environment in which monetary policy was now to be conducted was thus different than during ‘The Great Moderation’. We therefore needed to review the arsenal of measures that can be used in a crisis situation. Many measures during one week in March last year We are now back where we started in my story, that is to say in March last year. What we saw then was a very rapid and dramatic sequence of events. The stock markets began to decline as early as late February, when the coronavirus began to spread increasingly quickly outside of China. The WHO declared COVID-19 to be a pandemic on 11 March. On 12 March we saw the largest stock market fall in one day in Sweden so far, when the index fell by 11 per cent. This meant that the index had fallen by 30 per cent since 20 February. The fixed-income markets were also affected to an extremely large degree (see Figure 7). All bond rates rose to a varying extent. Investors’ new motto was ‘dash for cash’, as they abandoned unsafe assets in favour of safer ones with high liquidity. Corporate bonds market under scrutiny When Swedish companies have needed to finance themselves with loans, they have traditionally used bank loans. But in recent decades, there has been a structural transformation, which means that they increasingly finance themselves via interest-bearing securities (see Figure 8). At present, interest-bearing securities account for one third of their loan financing.
Many of these policies simply seek to solve or bypass the legal and incentive problems in the market today and mimic efficient private actions that might be taken if mortgage loans were all held in portfolio and accounting rules did not discourage net present value maximization. Others seek to solve coordination problems and take account of the externalities or spillovers to generate outcomes that are superior from the broadest perspective of the nation as a whole. Earlier this week Chairman Bernanke sent members of Congress a thoughtful analysis of housing policy11 by staff at the Board of Governors in Washington that evaluates a number of these same issues. What I would like to do today is to elaborate on some specific proposals we have developed in New York, in order to try to persuade you that there are workable solutions to our housing problems at costs that I deem very reasonable relative to the economically inefficient path we are on. Of course, I am open to other promising alternatives that would address the same issues. I note also that a truly comprehensive approach would also include long-term reform –including reform of Fannie Mae and Freddie Mac – to put housing finance on a more stable footing and to equip the market to deal more effectively with any future systemic shocks. But I will not discuss these issues in-depth today. Access to mortgage credit Restoring demand for housing requires new mortgage debt to be offered to creditworthy borrowers on reasonable terms.

Henrique Meirelles: Challenges for monetary policy – Brazil and the international context Speech by Mr Henrique Meirelles, Governor of the Central Bank of Brazil, at the Conference “The Impact of Brazil on the Global Scenario”, São Paulo, 10 July 2008. *  *  *  In mature economies, the years from the beginning of the 1990s to mid-2007 were characterized by low GDP volatility and low inflation, circumstances that led prominent economists to name the period as the era of the “great moderation”. That environment resulted from better monetary policy, a fact that translated into credibility gains for central banks, globalization and advances in productivity linked to information technology developments. At the time there was a substantial consensus that the emergence of Asia, particularly of China and India, would contribute to keep global inflation permanently under control. Thanks to cheap labor and the intensive use of new technologies on the production process, China – and to a lesser extent India – exported deflation (or at least disinflation) to the world economy through a consistent decrease in their export prices. There is now growing evidence that this era might have came to an end with the unbalances between the expansion of global demand and supply. Moreover, there are also signs of increasing labor costs in China, due to both changes in labor legislation and increasing shortages of specialized workforce. In the benign environment that prevailed through mid-2007, central banks of mature economies engaged in neutral or even expansionary monetary policies for relatively long periods.
Chart 1b raises the correlation between the two layers to 0.8; there is now strong feedback between the sub-systems. It results in a notable elongation of the system-wide distribution and an even greater probability of good or bad news striking simultaneously; it becomes more non-normal, closer to the statistical properties we expect from natural, biological and social networks. If we allow one of the layers of this cake to exhibit the properties of a complex system, by assuming it is t- rather than normally-distributed, then the system-wide distribution is shown in Chart 1c. 6 The tails of this distribution have now further widened. And if we allow for a nonnormal distribution of correlations between the sub-systems – by assuming correlations rise when there is a bad draw, as during crises – the lower tail is larger still and the mass is skewed downwards (Chart 1d). The final, and perhaps most interesting, case is shown in Chart 1e. This shows a three-layer network. Two of these layers are themselves complex (they are t-distributed) and all of the layers are strongly correlated in the network tree. The resulting system-wide distribution is highly irregular. It is also heavily fat-tailed, meaning that catastrophically good or bad outcomes are now much more probable than the normal distribution would suggest. Its topology is significantly more complex than any of its individual layers. These simulations, although simple, provide some insight into the likely behaviour of a complex system of systems.

And despite a significant rise in risk weights, there had been only a modest slimming of SIFI trading books by 2013, with the average share of assets going from 22% to 19%. An alternative, more micro-economic, approach to gauging organisational complexity is to look at internal structures. For example, Collinson and Jay (2012) use a five-way classification of complexity: governance; internal structures; staff capabilities; roles and responsibilities; and corporate culture. They use this to evaluate the world’s largest 200 companies, including 26 banks. Financial services rank sixth overall as an industry on complexity grounds. Within this, however, there is a striking diversity in performance, with a number of banks standing out as having high levels of complexity and low performance. Chart 5 plots banks’ complexity and performance, based on a study by Simplicity Consulting in 2012. 9 It shows an inverted U-shaped pattern. While modest degrees of bank complexity are good for performance, beyond a threshold these complexity benefits go into reverse and performance worsens. This U-shaped pattern is consistent with micro-economic theory. It suggests economies of scale and scope in banking can give way to diseconomies beyond some threshold. There is empirical evidence suggesting diseconomies of scale may operate for some SIFIs, consistent with them being “too complex to manage” (Davies and Tracey (2014)). Taken together, this evidence suggests the world’s SIFIs are, and remain, highly complex entities in their own right. (b)  Complexity within the financial system  As with individual banks, there are no perfect metrics of financial system complexity.
On the other hand, a long period of very low interest rates may lead to imbalances in the domestic credit and real estate markets, which may pose serious risks for financial stability. We are well aware of these risks and are analyzing them very carefully. However, due to the exceptional monetary policy situation, interest rates cannot readily be increased to address such threats. In other words, at the current juncture, monetary policy cannot react to these imbalances with conventional monetary policy instruments. Therefore, the Swiss Government is due to decide soon upon the introduction of so-called macroprudential instruments that can be used – if necessary – to mitigate potential credit and housing market distortions. Conclusion The outlook for the global economy remains subdued. This, together with the persistently strong Swiss franc, is weighing on economic activity in Switzerland. Although some indicators have pointed to a slight stabilization recently, we project that the Swiss economy will grow only weakly over the next few quarters. The degree of uncertainty regarding the growth outlook remains unusually high, also by historical standards. Downside risks – in particular stemming from a further escalation of the European debt crisis – are substantial. If these were to materialize, economic activity in Switzerland would suffer a much more pronounced slowdown than just described. Despite this rather gloomy overall picture, we should not overlook the potential for a more optimistic development. For instance, if the European authorities were to credibly commit to a sustainable solution soon, existing uncertainties would be reduced substantially.

The aim is twofold: First, banks with more equity are better equipped to absorb losses that can arise as a result of excessive lending growth. Second, costs for mortgage lending rise, counteracting the build-up of imbalances in this segment. The buffer is called countercyclical because capital requirements increase when the mortgage market is on the rise. This dampens the upswing and strengthens the safety buffer of banks and of the financial system. The requirements are reduced in a downturn when banks have more capital available to absorb potential losses on loans. This mitigates the likelihood of systemic risk materialising and leading to a downwards spiral of emergency sales and loan defaults. Acting on proposals by the SNB, the Federal Council activated the sectoral CCyB in 2013 and, in 2014, increased it to 2% of risk-weighted mortgage loans for residential property in Switzerland. In addition to the sectoral CCyB, there are two measures in particular which the industry introduced in 2012 in the form of self-regulation. These measures address the demand for loans: First, the obligation that mortgage borrowers have to supply a minimum amount of own funds. Second, the obligation that part of the loan has to be repaid within a set period if the loaned amount constitutes more than two-thirds of the property value. 24  Cf. Smets (2014).