samchain/econo-pairs-v1 huggingface dataset:
A number of empirical studies have looked at the effects of home working on productivity.5 Pre-Covid, the lion’s share of these studies suggested home-working improved productivity. As one example, Bloom et al (2015) conducted a randomised control trial in a call centre of a Chinese travel company, randomly allocating some workers to work from home and others to work in the office, before measuring their respective performance. Home-working improved worker productivity by around 13% almost a day’s extra output, a massive gain. Interestingly, after the trial the company allowed everyone who wanted to work from home to do so. That improved company performance by 22%. These productivity effects do not appear to be fixed across different demographics, firms, tasks and sectors.6 For example, studies suggest productivity gains from home-working are largest for creative tasks, perhaps reflecting the benefits of a quieter, less distracting home-working environment.7 It is also worth saying that some of the evidence of productivity gains may be biased upwards by self-selection, with those opting to work from home more likely to be able to do so productively. When it comes to the productivity effects of home-working during the Covid crisis, the evidence – while thinner – points in a different direction.

Caleb M Fundanga: Enhancing access to finance in Zambia Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of the Access Bank Zambia Limited Acacia and Longacres branches and the Visa Debit Card, Lusaka, 16 February 2010. *  *  *  Your Excellency the High Commissioner of the Republic of Nigeria in Zambia, Ms Marcus Folake Bello; The Chairman of the Board Access Bank Zambia Ltd, Mr Caleb Mulenga; The Group Deputy Managing Director, Access Bank Plc, Mr Herbert Wigwe; The Managing Director, Access Bank Zambia Ltd, Mrs Mukwandi Chibesakunda; Members of the Board of Directors for Access Bank Zambia Ltd, present; Management and Staff of Access Bank Zambia Ltd; Colleagues from Bank of Zambia; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. It is my privilege and honour to officiate at this important launch of the Longacres and Acacia branches of Access Bank Zambia Limited. As the Central Bank and regulator of the banking sector, we are always pleased to be associated with the achievements of the institutions that we regulate, particularly where these developments lead to increased access to banking services as well as convenience for the Zambian public. Ladies and Gentlemen, it is a well known fact that bank branch expansion programmes play an important role in increasing access to the banking services.
What I can say, though, is that as many other countries are already in recovery, Iceland’s is now only expected to begin in the second half of this year. But there are already several indications that Iceland is on the right path to recovery. We are on an IMF programme with three key elements: exchange rate stability, sustainable fiscal position, and rebuilding the financial sector. The exchange rate has been stable since last summer and has appreciated lately, with the support of capital controls but without supporting intervention by the Central Bank since early November. The fiscal consolidation programme has been progressing as planned. The functioning domestic banking system has been resurrected, and the final steps in the financial restructuring of the savings banks are being taken. With the Second Review of the IMF programme just finished, Iceland will gain access to foreign currency loans in sufficient amounts to dispel any concerns that it will be able to refinance large foreign currency sovereign debt payments coming due in 2011 and 2012. Furthermore, with the dust settling after the collapse, it seems that Iceland’s net foreign debt will be below 80% of GDP, including the estimated Icesave debt. This is similar to GDP in 2005; it is sustainable, and it is not on the top of the international debt league table. In short, Iceland does not face a sovereign debt crisis. It faced a foreign liquidity crisis and lack of access to foreign capital markets.

As you know, one of the origins of this crisis was the poor lending standards and lax risk controls that led to significant losses among many of the firms that dominate the financial industry. As the magnitude and widespread nature of these problems became evident in the early part of 2007, there was an abrupt loss of confidence and a sharp and sustained increase in risk aversion among investors. Liquidity in short-term funding markets seized up as concerns over the viability of many bank and non-bank financial institutions increased. Many of the Federal Reserve’s early efforts – including the Term Auction Facility, Term Securities Lending Facility and the Primary Dealer Credit Facility – were directly aimed at restoring the ability of financial firms to obtain access to liquidity. And while it is still too soon to declare victory on this front, there have been significant improvements in interbank financing markets. The next leg of policy intervention focused more directly on shoring up the strength of our financial institutions with programs such as the Treasury’s Capital Purchase Program and the FDIC’s Temporary Liquidity Guarantee Program, and here too there has been progress in a number of dimensions. Most notably, perhaps, is that in the wake of the release of the results of the recent stress test, the largest U.S. bank holding companies have shown an increased ability to raise capital and issue debt without government support. The major securities firms have deleveraged and have built up significant liquidity buffers.
The UK’s Senior Managers Regime (SMR) gives teeth to voluntary codes by incentivising firms to embed them and by reestablishing the link between seniority and accountability. The Bank’s findings suggest that the global macroprudential responsibilities of AEs will likely extend to the oversight of market-based finance given its potential for major cross-border spillovers. 28  See Carney, M (2017), ‘True Finance – Ten years after the financial crisis’. 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Reinforcing the best of resilient non-bank financial intermediation Over half of investment funds have a structural mismatch between the frequency with which they offer redemptions and the time it would take them to liquidate their assets.29 Under stress they may need to fire sell assets, magnifying market adjustments and triggering further redemptions – a vicious feedback loop that can ultimately disrupt market functioning. Two-thirds of investment funds with structural mismatches are domiciled in the US and Europe so, as is the case for banks, ensuring leverage and liquidity risks are managed in funds investing abroad is both a national asset and a global public good. System-wide stress simulations are currently being developed, including at the Bank of England, to assess these risks.30 And authorities are beginning to consider macroprudential policy tools to guard against the build-up of systemic risks in non-banks. Regulators currently have far less sight of risks within funds compared to the core banking system, particularly synthetic leverage arising from funds’ use of derivatives.

RFAs are largely untested and swap lines may only be used in very specific situations between specific countries. There is no evidence the formal GFSN deters countries from holding reserves. 19 The extra reserves that EMEs have accumulated over the past two decades have reduced the sensitivity of Capital Flows-at-Risk to Push factors by almost 50%. But this extra insurance has come at a domestic high cost, both to finance and because reserves can crowd out domestic investment.20 And it has global externalities, with the vast accumulation of safe assets distorting yields, building global imbalances and increasing the risks of a global liquidity trap.21 Chart 14: Components of the global financial safety net as a per cent of global external liabilities 12 10  Per cent of global external liabilities  IMF Permanent (rhs)  IMF Temporary (rhs)  RFAs (rhs)  FX Reserves (lhs)  Per cent of global external liabilities  8  3  2  6 4  1  2 0  0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016  Sources: IMF, central bank websites, RFAs, Lane Milessi-Ferretti (2007) External Wealth of Nations dataset and Bank calculations. Notes: FX reserves exclude gold. 19  See Scheubel, B, L Stracca and C Tille (2019), Taming the global financial cycle: What role for the global financial safety net?, Journal of International Money and Finance 94: 160–182.
Studies by organisations such as the OECD and the IMF point to a clearer connection between long-term growth and the structure of tax and benefit systems than any direct relationship between the tax burden and potential growth. However, this is an area to which Sweden by virtue of its high taxes must pay continued attention. Economic policy must be focused on finding ways to reduce the distortional effects of the tax system, not least as regards people’s willingness to work. High marginal taxes can reduce the motivation to work, thus hampering the economy’s potential growth. This applies particularly when the benefit systems are linked to income. At an individual level, this could mean that someone who is offered a job and at the same time must pay higher tax and receive lower benefits may come to the conclusion that it is more rewarding to remain outside the labour market. This dampens the labour supply and thereby also the economy’s long-term potential growth. Growth issues and particularly the labour supply now appear to be increasingly in the spotlight, which is positive provided that it also lays the foundation for further reform. Having said that, it is pleasing to note that several reforms have been introduced recently with a view to decreasing the distortional effects of the tax system, in particular among low-income groups. This applies perhaps primarily to the steps that have been taken to abolish individual social security contributions, thus reducing marginal taxes among low- and medium-income groups and raising thresholds for state income tax.

For instance, as late as last summer it became possible in Germany to shop after 6 p.m. on weekdays and on Saturday afternoons. However, it is still almost impossible to find a shopping centre in Berlin or Frankfurt that is open on Sundays, a day that ought to be very suitable for retail trade since customers are usually not at work then. So a continued modernisation of working-hour laws could contribute to further improving efficiency in the German economy. Another area is the costs associated with downsizing. European firms are in many cases obliged to pay for laid-off employees a long time after their employment has finished. This may make the labour market less efficient in downturns, as firms often try to retain existing staff instead of implementing costly cutbacks. The situation can become particularly serious if the downturn turns out be longer or deeper than firms initially fear, since cutbacks during the economic downturn risk aggravating the decline. In this respect, the euro area and Sweden are at a disadvantage compared with the UK and the US, where the labour market responds much quicker to changes in economic conditions. Labour market legislation can therefore also be significant for the economic cycle. Firms that are forced to retain a larger workforce than they have use for during a downturn will not be as financially well prepared to meet a future upswing. We can see signs today of how this is having an adverse effect on the European economic recovery.
Policy strategy Delivering the growth in activity, the rise in domestic costs and the firming in core inflation measures necessary to return inflation to target requires monetary policy to be set appropriately both now and prospectively. In this regard, one concern has been the constraint imposed on monetary policy by the effective lower bound on policy rates. In my view, with the healing of the financial sector and the lessening of some of the headwinds facing the economy, that concern has become less pressing with the passage of time. As I made clear in my first open letter in February, were downside risks to inflation to materialise the MPC could decide either to expand the Asset Purchase Facility or to cut Bank Rate further towards zero from its current level of ½ per cent. 29 In the current circumstances there is no need to wait to raise rates because of a risk management approach and run the risk of inflation overshooting target. At the same time, the timing and pace of prospective interest rate increases need to be put into perspective. Headwinds to growth and inflation remain. Growth in the parts of the global economy that matter most to the UK is running ¾ percentage points below its historic average. Sterling has appreciated around 18 per cent over the past two years and around 7 per cent since the turn of the year. This will exert a drag on inflation both through lowering import costs and by lowering world demand for UK goods.

Yet the risk of further market correction remains high. 6. The global economy remains highly vulnerable and we cannot fully assess the extent of the crisis yet, due to three factors: uncertainty over the dynamics of the pandemic; high spillovers on several fronts, and weakened international and domestic institutions. 7. The Covid-19 poses major challenges to emerging-market economies (EME). The spread of the disease finds them with worse living conditions and less resources. EMEs remain heavily exposed to spillovers due to dependence on capital inflows, commodities and remittances. Economic informality, limited social safety nets, and shallow financial markets limit the effectiveness of shock absorbers and policy responses. 8. Yet not all EMEs are the same. Some face this crisis with stronger fundamentals, broader policy space and more credible and effective institutions. 9. Chile has been hit hard by the pandemic. The first cases emerged in early-March and contagion seemed to stabilize by end April, only to rapidly escalate over the last month and a half. The country is now in its 15th week of the pandemic, with 250.000 confirmed cases and active cases stabilizing again. While Chile currently stands 8th in number of cases in the world, mortality rates remain low and testing broad, thanks to its stronger health system compared with other EMEs. 10. The spread of contagion has led authorities to adjust their NPC strategies. This has included stricter and broader quarantines, which have grown from 20% of the population in April to 49% these days.
An investor wanting to make an inter-temporal transfer without taking on any credit risk, for example, could then buy a bond and purchase credit default swap protection, thus retaining exposure to the cash flows on the risk free component of the underlying instrument. Synthetically, this expands the volume of low risk investment portfolios. On the other side, a market is created for those who specifically want to trade default risk which allows cleaner pricing of this dimension of risk. Efficient markets for each element should raise the efficiency of the corporate bond market as a whole, with attendant benefits for both borrowers and investors. •  Furthermore, because credit default swaps have different maturities, investors could, for example, buy the corporate bond and retain the resulting exposure to default risk in the near term. But they could also buy protection against default at longer horizons, about which they may be more uncertain. •  Moreover, nominal corporate bonds can also be separated into a nominal and inflation-linked risk component if the corporate also issues inflation-indexed bonds. BIS Review 93/2008  3  Investors can utilise these instruments to buy or sell protection against exposure to inflation risk. As noted above, the markets for single-name corporate credit default swaps have become more liquid than the underlying bonds given the flexibility and specificity they provide to endinvestors. 9 The underlying components of risk can, of course, also be recombined by financial engineering to create new financial products with different risk characteristics.

For example, the combination of a cold winter and a dry summer contributed to a 26 percent rise in electricity prices, as measured by the consumer price index, in 2018. Negative supply shocks thus lead to lower output but higher inflation. This poses a dilemma for monetary policy. Should the policy rate be raised to curb inflation? Or should it be lowered to stimulate the economy? Chart: Quarterly growth Norway, autumn 2018 With our flexible inflation targeting regime, we will not usually change the policy rate if a supply shock is transient. One example is the decline in agricultural production in Norway in 2018 as a result of an unusually hot and dry summer. Production fell by 40 percent in the third quarter. Even though Norway’s agricultural sector is small, the fall in production led to a decline in economic 2/7  BIS central bankers' speeches  growth between the second and third quarter. We assessed the decline as transient, and the policy rate was not changed. However, if such an event leads to a persistent rise in inflation in the next round, this may affect the policy rate. So far, more unstable weather has only had short-term effects on output, employment and inflation in Norway and other advanced economies. Wide fluctuations have been observed in food and energy prices in particular1, but there have up to now been few instances of physical climate change influencing macroeconomic developments in these countries.
My second lesson from the crisis was that we need to think about resilience much more broadly. Reflecting that, economic policy makers now think as much about stability over the financial cycle as we do over the business cycle – a broader definition of resilience. One major response to the financial crisis was the creation of a new Financial Policy Committee as part of the Bank of England, giving it an explicit mandate to identify, monitor and take action to remove risks to the financial system. The Committee’s goal is to ensure the financial system is resilient to shocks, so that it doesn’t again act as an amplifier, worsening the impact on households and businesses in the real economy, as it did in the crisis. My MPC colleague SIlvana Tenreyro sets out these arguments in detail in her spech “The fall in productivity growth: causes and implications”, available online at https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-fall-in-productivity-growth-causesand-implications.pdf. 4  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  The FPC has been active in pursuing this goal. We have a mandate to ensure the safety and soundness of the financial system as a whole. To do that, one of the things that we do is to regularly reassess and actively adjust the amount of loss-absorbing capital that banks, who are at the heart of the financial system, are required to hold as our assessment of the level of risks changes. (Our tool for doing this is called the counter-cyclical capital buffer rate, or CCyB.)

Those two risks broadly offset each other in terms of the balance of demand and supply, meaning that my best guess for inflation, and the outlook for policy, is in line with the central view. But as I have argued today, the outlook for policy depends on more than just our central expectation for the path for the economy – we need to consider the risks as well. My third lesson from the crisis was that policy needs to be prepared for the unexpected. That is true both for the MPC, who need to take the balance of risks to their central forecast into account when setting monetary policy, and for the FPC, who set financial policy based on their assessment of the risks to financial stability. The FPC track a very large number of risks; I will focus on just two – first, market volatility, and, second, Brexit.6  6  Jon Cunliffe’s speech “Financial stability post Brexit: risks from global debt”, available online at https://www.bankofengland.co.uk//media/boe/files/speech/2019/financial-stability-post-brexit-risks-from-global-debt-speech-by-jon-cunliffe.pdf, goes into more detail on several key risks including Brexit and global risks. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  First, one widely-used measure of the risks to economic  Chart 10: Measures of uncertainty  stability is the measure of global policy uncertainty shown in Chart 10, taken from the May 2019 Inflation  6  Report.
The deepest red, for example, means the indicator is beyond the 90th percentile of its historic distribution. Chart 4 Selected indicators of underlying vulnerabilities  Series and sources: 12-month mortgage credit growth (Bank of England); share of households with mortgage LTIs above 4.5 (UK Finance); corporate debt growth (annual) – Bank staff measure (Bank of England, Association of British Insurers, Cass Commercial Real Estate Lending Survey, Datastream from Refinitiv, Deals Business Intelligence from Refinitiv, Deloitte, LCD, an offering of S&P Global Market Intelligence, London Stock Exchange, ONS, Preqin and Bank calculations); UK current account balance (% GDP) (ONS and Bank calculations). Notes: Each data series included in the heatmap has been rescaled into a percentile by using a kernel density estimate of its cumulative distribution function using all available data back to 1987. The Bank staff estimate for corporate debt adjusts the official ONS measure by adding sources of market-based finance not captured by the ONS and by removing other sources of market-based finance that have been misallocated to corporate debt. The net effect of these adjustments is predominantly to decrease the level of debt pre-crisis. Stocks of PNFC debt at 2018 Q3 split: 43% bank loans, 39% corporate bonds, with residual being money market instruments and other forms of non-bank finance. The temperature overall doesn’t look elevated. The only warm colour on this heat map stems from the UK’s continued reliance on the kindness of strangers – its persistent current account deficit, running currently at 4.4% of annual GDP (Chart 3).

Recognizing the clear need for a more risk-sensitive and flexible Basel Accord, the new framework is intended to more closely align regulatory capital requirements with underlying risks, and to provide banks and their supervisors with a range of options for the assessment of capital adequacy. There is more emphasis on banks’ own internal methodologies as well as other elements that are critical to ensuring the capital adequacy of banks, such as strong risk management and sufficient public disclosure of information. The Committee has also discarded the one-size-fits-all framework for the calculation of minimum capital requirements. Instead, the proposed framework provides a menu from which banks can choose, with the authorization of their supervisor and depending on the complexity of their business as well as the quality of their risk management. The Basel Committee is seeking comments on the proposed framework until the end of May and plans to finalize the new Accord well before the end of this year, during which time the Committee will pursue an active dialogue with non-G10 supervisors. It is envisioned that the revised Accord will be implemented in 2004. The role of a sound and stable macroeconomic environment A sound and stable macroeconomic environment is also crucial for financial stability, and more generally for promoting sustainable growth. The converse--macroeconomic overheating--raises the likelihood of an eventual crisis, first by promoting excessive, and eventually unsustainable, external and internal borrowing.