samchain/econo-pairs-v1 huggingface dataset:
And, I regularly visit different parts of our District so that I can meet with local businesses, community development professionals, and the people who live and work here. This on-the-ground intelligence is valuable to me and helps inform my view of the region and the economy, which, in turn, plays an important role in shaping my outlook on policy. Let me now talk a bit about job growth in our region. Job growth in the region Nationally, the labor market has added 2.4 million jobs over the past year. And, the strong jobs reports released over the past two months have helped allay concerns that arose earlier this year that job growth was beginning to stall. Indeed, these reports reinforce my view that labor market conditions continue to improve. Turning to conditions closer to home; job growth in our region has generally been somewhat below the national pace. One important exception is New York City, where job growth has been strong, despite the relatively sluggish performance of the financial services industry. In the past, the City has counted on job growth from Wall Street to fuel economic growth during recoveries and expansions. This time around, however, job gains in the securities industry have been meager. Instead, the City’s job growth has been quite widespread in sectors outside of finance. One that is especially noteworthy is the City’s burgeoning technology sector, which has been creating jobs in industries such as internet publishing, online shopping, and scientific research and development.

Growth in these high-paying jobs is picking up much of the slack created by the softness of the securities industry. In fact, strong growth in New York City has been helping many of its surrounding areas, including northern New Jersey, Long Island and Fairfield County. Many workers residing in these areas commute to New York City and have access to the City’s vast, diverse and expanding job market. For example, Long Island’s unemployment rate is now below 4 percent, its lowest level in nearly a decade. In Connecticut, Bridgeport has also benefited. When I visited a few months ago, I saw firsthand some of this resurgence. Bridgeport is both the largest and poorest city in Fairfield County, and for decades had seen its population and  BIS central bankers’ speeches  1  job base steadily decline. But, since 2000, its population has started to grow again for the first time since the 1940s. Even as other parts of Fairfield County struggle with a number of high-profile corporate relocations, jobs have begun growing and Bridgeport is showing signs of revival. In upstate New York, economic growth has generally been modest, with job growth running well below the national pace. This isn’t new, as upstate New York has historically tended to grow much more slowly than the nation. Though growth has been slow for the region as a whole, some places are doing relatively better than others.
The Yellen camp’s view is that the Phillips curve looks largely as it normally does or, at any rate, has changed so little that it still works as an effective channel through which central banks can influence inflation. According to the Borio camp, the Phillips curve has instead almost broken down or, at any rate, changed so  9 [20]  much that it no longer forms a central part of the inflation process. More specifically, high resource utilisation no longer results in higher inflation, according to this view. Instead, it is claimed, inflation is highly influenced by structural factors. Factors often emphasised as exerting downward pressure on inflation are globalisation and, looking forward, more and more digitalisation. 14 These are arguments that those who have followed the debate in Sweden in recent years will recognise. According to this view, the central banks will find it difficult to steer inflation for a long time to come. As I mentioned in my introduction, taken to its conclusion, this means that it is pointless to set up targets for inflation, as this is mainly determined by factors outside monetary policy. As I also noted earlier, the Yellen camp does not share this view but believes that inflation targets are meaningful, important and possible to attain. Implications of the Swedish experiences What view, then, should we take of the international debate in light of our experiences here in Sweden? As I see it, our experiences overall are more in line with the Yellen camp's view.

The effect on inflation of a given level of resource utilisation can certainly vary over time, which is to say that the slope of the Phillips curve is not necessarily always the same. The time dynamics may also vary, that is the time lag of the impact of resource utilisation on inflation is not always the same. In addition, inflation is, of course, affected all the time by a series of other factors – various shocks, in the vocabulary of economics. 14  See Borio (2017). 15 See, for example, Blanchard (2016) and The Economist (2017). 10 [20]  These can be highly temporary, but also relatively persistent. However, I find it very hard to swallow, not to say completely unlikely, that, other things being equal, there should be no relationship between resource utilisation and inflation. My conclusion that it is important not to lose sight of inflation and inflation expectations is also quite well in line with the Yellen camp’s view, in the sense that the inflation target and confidence in the target are seen as vital. It is worth noting that there is a debate, not least in the United States, which has come the furthest with its policy rate rises, about how rapidly monetary policy should be made less expansionary. 16 The concern is precisely that excessively rapid changes will make inflation and inflation expectations fall below target again – something that there thus is reason to avoid.
Let me now turn to the second topic which is the medium-term issue of financial sector reform. Although the Thai financial sector has proven resilient amidst the global crisis, reform of our financial sector needs to continue to ensure that the sector is well positioned to fully support the economy, in terms of efficiency and diversity of products. In addition, the current crisis will definitely bring about important changes in the global financial landscape, as well as in the regulatory approach to bank regulation and supervision. This means the reform process must help position the financial sector to adapt to the emerging financial landscape, while contributing to increasing efficiency and the robustness of the financial system. On this issue, key trends that we can expect to see in the emerging financial landscape will include, on the demand side, consumers becoming more risk averse and having preference  2  BIS Review 76/2009  for local institutions and for simplicity of transactions and instruments, while demanding greater accountability and transparency. On the banking side, business models of banks will become more conservative, relying less on wholesale funding and on the use of leverage, while giving greater importance to risk management and higher liquidity buffer. And on the regulatory front, more emphasis will definitely be on surveillance with focus on systemic stability, and the roles of systemically important financial institutions including the non-bank. These changes are the key essentials that will define the emerging financial landscape to which we will need to adjust.

Inflation, on the other hand, continues its downtrend in May, and although we see inflation numbers turning negative, the current uptick in commodities and asset prices, together with signs of greater stabilization in the real sector, help lessen the concern regarding deflation risk. Against this background, the Monetary Policy Committee in its meeting on May 20th held the view that monetary policy has been substantially eased and the current policy rate at 1.25 percent remains supportive of the economy. Two implications must be drawn from this decision. First, given the low policy rate and the ample availability of liquidity, more gains could be made by ensuring that, at the current policy rate, the benefits of past rate reductions are passed on more fully to consumers and the private sector through corresponding adjustments in the banking system’s interest rates. The second implication is that, while the  BIS Review 76/2009  1  emerging signs of stabilization are positive and are consistent with the developments on a worldwide basis, they must be treated with caution given that the current state of the global economy and financial markets are still far from normal. Hence, the MPC will continue to monitor closely the uncertainty surrounding both domestic and external economic conditions, and stand ready to implement appropriate monetary policy to support economic recovery in the period ahead. Turning now to the banking sector. The Thai banking sector was able to weather the impact of the global financial crisis with a relatively strong initial position.
Indeed, in this case one would surely want to set the target growth rate for nominal income lower to reflect the lower rate of growth of supply, though by how much might be hard to judge. To me, the choice between the present flexible inflation target and a nominal income growth target – probably also pursued with a degree of flexibility – therefore centres less around any differences in macroeconomic outcomes, which are likely to be relatively minor, and more around issues connected with accountability and communication. The issue here is not whether our objective should include growth – it already does – but whether a target for nominal income growth provides a better way of describing policy. One advantage of a nominal income growth target is that it might lead to fewer instances where we have to resort to the use of our “constrained discretion” to justify a temporary acceptance of inflation away from the target in order to avoid undue volatility in output and employment. Fifteen years ago, when the current arrangements were instituted, I calculated7 that inflation should be expected to deviate from the target by more than one percentage point – thus triggering an Open Letter of explanation to the Chancellor – on about 40% of occasions. In fact, since 1997, inflation has been more than one percentage point away from the target, just 20% of the time. But those instances have been entirely concentrated in the past six years, which has seen inflation varying between 1.1% and 5.2% and averaging 3.1%.

I consider three policy scenarios. In the first scenario (the green line), the central bank can credibly commit to its future policy settings. I do not regard this as attainable in practice over anything other than very short time horizons, as central bankers generally cannot tie the hands of their successors. But it does provide a useful benchmark against which to judge alternative policies. The nominal interest rate is cut straight to its zero lower bound and remains there for over six years, far longer than is necessary to bring output back to potential and enough to generate subsequent overheating and excess inflation. But it is precisely that expectation of temporarily higher future inflation that reduces expected future real interest rates and boosts demand today. In the second scenario (the red line), the central bank cannot commit in this way; the best it can do is simply to set policy on a quarter by quarter basis. Interest rates are again cut to their zero lower bound but now the monetary stimulus is withdrawn earlier, after about four years, and there is no overheating phase. The consequence is that expected real interest rates are higher than under the first scenario, demand is weaker and the output gap larger. From a welfare perspective, the first scenario offers a better outcome, because – at least in the model – the overheating period is a price worth paying to generate higher activity and less deflation in the near term.
From a micro analysis point of view that was reflected on unsustainable financial position of enterprises and households balance sheets, lead by persistent fighting for market share in products and services in the banking system. It is for that reason that hard gained achievements attained during the last 15 years in eastern Europe, got reversed within one week. Today, one year after the eruption of the financial crisis, I have to affirm that all the measures undertaken by central banks of countries in the region resemble one another. Generally speaking, in my opinion the measures adopted during this period are of an extreme nature; they are unusual and go against the “constitution” of the modern central bank with regard to liquidity, money market and monetary policy transmission channels. However, we have embraced the philosophy that “the end justifies the means”. Nevertheless, I think the central bank has become more vulnerable in terms of independence and monetary policy efficiency. Providing liquidity in any case, in any quantity, with any maturity and accepting any kind of collateral would definitely damage the monetary policy, with potential second round effects on financial stability. If central banks in the short run shift their focus from the primary objective to supporting economic growth at any cost, it would indirectly create premises for long rung economic imbalances. The current polices pursued by both monetary and fiscal authorities should not be considered as a new normality.

It is important that such cooperation be guided from a set of consolidated principles with regional relevance. Fifth, there is urgent need for policies that would encourage stronger inward FDI and other non-bank flows. The region’s growth model might need to be more self-reliant, emphasizing domestic savings, better mobilization of labor resources, and a much greater role for the traded good sector as an engine of growth. Dear participants, Let me conclude by pointing out that our region offers an interesting combination of countries, languages, culture and geographical composition. Analyzed individually, it is difficult to think that our economies generate substantial incentives for foreign investors, particularly for strategic and technologically advanced investors, able to use the advantages provided by the economies of scale. Moreover, the cost associating different strategic projects at a national level would be higher for our still lagging economies. I do believe that there is plenty of room to establish a joint regional market and our duty is to make utmost use of it. There are still a few gaps in the region with respect to infrastructure, energy, tourism, financial architecture, mining and agriculture. Out task is to jointly identify missed opportunities, to jointly incorporate those into realistic business plans and to jointly present 2  BIS Review 164/2009  these regional projects in a contemporaneous way to private investors and supranational agencies, to benefit their political, financial and technological support and finally ensure a stable growth model.
The necessary coordination at national level must therefore be combined with mechanisms to ensure the agreement is able to cater to the existing productivity and activity-related differences across firms and sectors.8 Equally, where the standard of living of certain segments of households is hit particularly hard by rising energy costs, the incomes agreement should naturally seek to mitigate their straitened circumstances. In short, these considerations reveal the need to avoid overly sweeping measures to implement a potential incomes agreement that might prove too rigid for certain groups of agents. Third, any approaches that automatically link wages to past inflation or indexation clauses are also to be avoided9. The aim is precisely to reduce the risk of triggering a wage-price feedback loop. In this regard, workers with collective bargaining agreements registered up to March this year that provide for any form of wage guarantee clause linking the final wage increases agreed in 2022 to developments in inflation are admittedly in the minority. Nonetheless, the figure (30%) is notably higher than it was at the end of 2021, when it stood at 17%. Of even more concern is the fact that this figure rises to 50% of the total when considering the agreements entering into force in 2023, albeit still referring to a small number of agreements in this case. Fourth, any incomes agreement should provide for multi-year wage increase and job protection-related undertakings. This would offer households and businesses some certainty in their spending and investment decisions.

On average, it will rise to 2.8% in 2022 as a whole, but then gradually slow over the rest of the projection horizon. Compared with the December projection exercise, the inflation forecast for 2022 is revised upwards significantly (by 3.8 pp), due, above all, to the recent energy component surprises. The balance of risks in this projection exercise is tilted to the downside in the case of economic activity and to the upside in that of inflation, amid extraordinary uncertainty as a result of the war in Ukraine and its geopolitical implications. In particular, economic activity and inflation will be very sensitive to energy and commodity market developments, to the hypothetical emergence of second-round effects on prices and wages and to the path of household consumption and saving. By way of example, later on I will describe in some detail the adverse repercussions for the Spanish economy of such second-round effects, underscoring the need to adopt an economic policy response that pre-empts these risks via an incomes agreement. The economic policy response The magnitude of the effects of the war will also ultimately hinge on the economic policy response, which has a crucial role to play. Allow me to offer a few thoughts on that response. European economic policies Like the pandemic, the invasion of Ukraine is a very adverse, exogenous shock common to the European Union (EU) as a whole, albeit with uneven effects across countries, sectors and firms.
We can choose the combination that minimises financial stability risk. We did it with tiering, or when we excluded the housing sector from our TLTRO lending facilities. For example, when the time comes for a gradual exit strategy, we could calibrate the sequencing depending on the state of financial stability. If, say, corporate debt looked particularly overvalued, and risk premia excessively compressed, and a source of systemic risk, we could choose to reduce the size of our private portfolio quicker and hold more sovereign bonds to manage the run-off of the stock. If the resilience of the banking sector were too affected by the prolongation of low rates, we could modify the tiering parameter. The world we now live in one where the toolkit used by central banks to fulfil their mandate has greatly expanded. As they now have several instruments in their monetary policy toolkit, the old Tinbergen principle may be understood in a new and broader way by incorporating several goals. But how can we then address Benjamin Franklin’s legitimate worry about “trying to please everyone”? Three rules may guide us to avoid excessive expectations. First we, the Eurosystem, must stick closely to our mandate which gives a clear primacy to our price stability mandate, without any change in the Treaty that governs us.

Financial systems are opened up, for the participation of domestic and foreign financial intermediaries, with a view to obtaining efficiency gains through greater competition and importing financial expertise. This has generally been a success, although specific problems have been encountered. A feature of these problems has been that, at times, the profit motive and the enthusiasm of financial intermediaries, not necessarily just the foreign ones, might prevail to such an extent as to undermine the public interest of ensuring effective financial intermediation. The problems might also have been the result of ineffective regulation of financial markets and supervision of financial intermediaries, and inadequate regard to the basic purpose of the financial system. One example, and it is only appropriate that I should use an example from Hong Kong, is the closure of the Hong Kong stock market in 1987. This was done in the interest of the financial intermediaries who were about to be hit badly by the world-wide crash that occurred overnight because they had taken large and concentrated positions in stock futures. The closure of a secondary market, which provides the liquidity for attracting primary market activity that channels additional savings into investments, was blatantly wrong and seriously damaged the credibility of the stock market as a channel for financial intermediation. The damage was temporary, as it turned out, and confidence was eventually re-established, but not without much soul-searching and many market reform measures. Such problems notwithstanding, it is clear that emerging markets in Asia are enthusiastic in embracing financial openness.
Mr. Heikensten discusses recent economic and monetary policy developments in Sweden Speech by the Deputy Governor of the Bank of Sweden, Mr. Lars Heikensten, at the Local Authorities Economics Seminar in Malmö on 19/8/98. Thank you for the invitation to attend this Seminar and talk about the Swedish economy and monetary policy. I shall begin with a brief account of how the Riksbank operates with its inflation target. In that context I shall also be saying something about economic policy’s results in recent years. Then I shall consider the Riksbank’s appraisal of the Swedish economy, as presented in our latest inflation report last June, together with subsequent economic tendencies. Finally I shall be returning to the somewhat longer perspective of my opening section. This will tie in with the theme of the seminar and highlight some factors that are of crucial importance for our success in creating a potential for future economic expansion. 1. Inflation target policy—how does it work? The objective of monetary policy is to keep the value of money stable. This has been defined more specifically as keeping the annual rate of inflation (measured as the change in the Consumer Price Index) at 2 per cent. Around this target there is a tolerance interval of ±1 percentage point which serves to accommodate normal deviations that arise, for instance, from transitory impulses. But the possibility of larger deviations than this cannot be ruled out.

BIS Review 66/1998  -3Notwithstanding the prospect of further good economic growth in the coming years, the Riksbank judged that the rate of inflation would remain low and even be less than we had expected earlier. The strong demand was certainly assumed to give some increase in inflationary pressure in the forecast period but not so much as to be a cause for concern. One reason lay in the good productivity growth that was also foreseen, indicating that full capacity utilisation in the economy would not be reached in the coming twenty-four months. Although capacity utilisation was high in certain sectors, the Riksbank envisaged that in the economy as a whole there would be a capacity surplus. External inflationary pressure was expected to be low in view of subdued international inflation, low raw materials prices and a somewhat stronger exchange rate. Expectations of future inflation among households, financial agents and manufacturing indicated a belief that future inflation would be low. Thus, confidence in economic policy’s focus on price stability seemed to have been firmly established. The Riksbank noted that the uncertainty in the assessment of future inflation was mainly whether it would be even lower than we foresaw in the main scenario. One of the main factors here was the crisis in Asia and its conceivable effects on international economic developments and prices.