samchain/econo-pairs-v1 huggingface dataset:
29 Every major period of deficits prior to 1950 has coincided with a time of war. After the Second World War, deficits essentially returned to normal. As you can see, after 1970 there was a significant change – all 6 countries represented in the graph started running sustained budget deficits, and this in times of relative peace. 30 Now take a look at graph 2. It shows public debt for the OECD, as a percentage of GDP, since 1970. Since the mid-1970s, the accumulation of fiscal deficits has led to a near doubling of public debt, as a percentage of GDP, in the OECD area. 31 While public debt can be desirable for many reasons, it is very difficult to argue that the appropriate debt-to-GDP ratios should be this high. Admittedly, the average OECD debt-to-GDP ratio has fallen somewhat since the late 1990s. The Maastricht convergence criteria for EMU countries and robust growth have clearly contributed to this trend. However, fiscal positions in the United States and in Europe have deteriorated again more recently. 32 For a long time, Switzerland stood out as an exception in the pattern of deteriorating OECD debt-to-GDP ratios. But with the economic slowdown of the early 1990s, Switzerland’s public debt increased rapidly, and exceeded 50% of GDP in 2003. Fortunately, it has since been brought back down. It stood at roughly 44% last year. How would Albert Gallatin view such unprecedented increases in public debt-to-GDP ratios? Presumably, he would be dismayed.

Malaysia has adopted a hybrid approach towards governance reform that includes legal reform, self-regulation as well as measures to encourage market-based regulation. The approach balances between prudential regulation, market discipline and shareholders surveillance. Malaysia has proceeded on the basis that there are aspects of corporate governance where statutory regulation is effective and necessary and in others where self-regulation is more appropriate. Building the necessary legal and institutional framework to support the development of good corporate governance practices within the capital and financial markets is therefore an important part of the process. Among the various measures initiated includes the law that provides the statutory framework to protect the interest of the depositors, customers and shareholders as well as the prudential framework to promote financial stability. This includes the legal provisions prescribing the maximum permissible shareholding limit to avoid concentration of ownership. There is also a restriction on extension of credit to related parties to avoid conflict of interest, as well as a limit on the lending to single customer. Other measures include the issuance of specific guidelines on the role and responsibilities of directors and the creation of various board committees. Greater emphasis is also accorded to the role of independent directors, minimum qualifications of such directors and their compensation to ensure sufficient independence to act in the best interest of the institution. In the area of Shariah governance, guidelines have been issued on the governance structure of the Shariah Committee in the Islamic financial institutions.
Another area in which there is significant participation of women is the services sector which has now become one of the most important sources of growth for the Malaysian economy projected to expand by 7.7% in 2008. Ninety percent of womenowned SMEs in Malaysia are in fact in the services sector. Some of these activities are also developing in the informal sector. As, the formal economy in Malaysia continues to prosper, there is significant scope to integrate the informal sectors of our economy with the formal sector. Deliberate actions to integrate the informal economy into the formal economy will give this segment of society increased opportunities. As part of the efforts to promote greater engagement of women in the modern economy and their increased participation in the formal economy, significant initiatives have been taken to raise the level of financial literacy among  2  BIS Review 37/2008  women. Greater empowerment can be achieved through the resulting greater financial independence. In many countries, the success of various national and international socio-economic reform programs have resulted in women becoming an increasing part of the formal economy. Through the concerted efforts of women's rights movements, economic policy intervention and gradual shifts in cultural norms, women today have more opportunities for education, careers and political representation. This has allowed for increased participation in the economy. Bringing women into the economic mainstream would contribute to the economic potential of the nation.

As this occurs, we are seeing the increased two way flows of investment, financial flows and talent. With full employment, activities requiring low labour cost are no longer our comparative advantage. Both multi-nationals and domestic corporations in such activities have since the 1990s relocated to other parts of the region. Resources are now redeployed to new areas of comparative advantage which are generating new areas of growth. As part of this transformation, the services sector has continued to become an important driver of growth, reflecting the flexibility and agility of the economy to shift resources to new areas of growth. While Malaysia continues to be a recipient of foreign direct investment amounting to 7.2% of GNP, outward foreign direct investment by Malaysian corporations account for 6.9% of GNP. BIS Review 37/2008  1  The financial landscape has also been dramatically transformed to become more diversified, more market oriented and more liberalised. The sector has also evolved from being fragmented to becoming more consolidated, operating with higher levels of efficiency. There are also stronger international linkages not only in terms of increased foreign presence in our financial system but also our financial institutions are increasingly venturing abroad. This trend has increased our international inter-linkages resulting in greater economic and financial integration with the global economy and international financial system. New areas of growth are also emerging in the financial system including in investment banking and Islamic finance.
I am happy that Thailand is the venue of, and is host to, this conference - a commendable international effort to bring us all closer to our aspiration of a sound and stable financial system. May I take this opportunity to thank the FSI and BIS for allowing us to take part in this event and for the excellent cooperation over the years. Our compliments to Mr. Jason George and his team for their very efficient organization of this event. I wish you all a successful conference. Thank you. 2  BIS Review 14/2004

That’s where the crisis starts. It is important to note the asymmetry in these developments: imbalances are slow to build up but very fast to unwind. And the adjustment process can be disorderly and traumatic. What role does monetary policy play? In a very basic sense, monetary policy is about determining the level of short-term interest rates. And it is equally basic to state that the interest rate is the price of liquidity. Therefore, it may happen that, because inflation is contained, interest rates are kept at a low level, and liquidity is cheap and easily accessible for financial intermediaries. In turn, abundant liquidity may increase risk appetite, induce  BIS Review 147/2009  1  maturity transformation and lead to growth in leverage. This has been called the "risk-taking channel” of monetary policy. Ultimately, it creates a link between the level of interest rates and those of risk premia. And this, of course, means that movements in interest rates have, all other things being equal, a bigger (and possibly less predictable) impact on the financial system, credit aggregates and asset prices. A lot of work remains to be done to precisely quantify that channel and disentangle its effects from those of the more "traditional” credit channel. Nevertheless it is clear that, in the future, central banks will need to pay greater attention to the impact of their decisions on the level of risk in the financial system. Some analysts would go a step further.
8  By construction, an event study approach can only capture the short-run elasticity of substitution. The medium to longer terms effects may be somewhat less as further portfolio rebalancing takes place. BIS Review 111/2010  11  that the efficacy of the latter will be less in normal times. The theoretical case for an effect from asset purchases rests on there being frictions that prevent the Eggertsson-Woodford neutrality result holding. During a financial crisis, when credit is hard to come by, arbitrageurs may find it difficult to find the wherewithal to correct any excessive compression of the spread between government bond yields and expected policy rates. During normal times, such credit will be easier to come by and the activities of arbitrageurs may therefore lead to the attenuation of the effectiveness of asset purchases as a monetary policy tool. Third, while purchases of government debt may be a suitable last resort at the ZLB, regular purchases during normal times will be liable to give rise to the suspicion that the central bank is doing so at the behest of the government in order to lower the cost of budgetary finance, rather than for monetary policy purposes. In other words, it is intending to monetise the debt permanently. Aside from giving rise to doubts about the central bank’s independence, it could also prompt inflation expectations and long-term nominal interest rates to rise. The communication challenge for a central bank in these circumstances would be formidable.

Then comes monetary policy; policy makers are therefore assumed to be able to react to movements in the real economy and in credit markets within the quarter, which does not seem unreasonable. House prices come last. For the United States, the variables in the vector auto-regression are: CPI inflation; GDP growth; the effective Federal Funds rate; the difference between the Merrill Lynch corporate BAA and 10-year Treasury yields; the growth in total private credit market debt outstanding deflated by CPI; the rate of change of house prices (the National Association of Realtors existing homes price index to 1975 linked to the Federal Housing Finance Agency thereafter) deflated by CPI; and the macroeconomic volatility index. For the United Kingdom, the equivalent variables are: CPI inflation; GDP growth; Bank Rate; the difference between the investment-grade corporate bond and 10-year government bond yields; the growth in M4 lending (excluding securitisations and loans to intermediate OFCs) deflated by CPI; the rate of change of house prices (the Nationwide house price index to 1983 linked to the Halifax measure thereafter) deflated by CPI; and the macroeconomic volatility index. The data are quarterly, there are two lags of each variable, and the sample runs from 1966 Q3 to 2010 Q1. A good case can be made for employing only more recent data, on the grounds that monetary policy reaction functions have evolved during this time. But the cost of that is reduced precision and estimates over just the latter part of the period turn out to be rather less well defined.
The purpose of our policy has been to prevent Sweden falling into the deep recession suffered by many other countries in connection with the crisis. It has thus been a question of wanting to manage our task of maintaining price stability and macroeconomic balance in the best way possible. 9 As I see it, there is no doubt that the Riksbank’s mandate allows us and even requires us to take into account risks linked to a credit boom and rising house prices. So, neither in the light of the international debate conducted today nor the mandate given to the Riksbank, has the monetary policy conducted been particularly “unusual” or “strange”. The monetary policy strategy the Riksbank has applied in recent years is also worth mentioning. What we have tried to do is to find a suitable balance where we support the recovery, but at the same time do not accelerate as hard as we might have done if we did not need to take into account housing prices and indebtedness. This has not, as one might sometimes think, been a question of braking hard. When all is said and done, the repo rate is currently no higher than 1 per cent. Difficult balancing act if the repo rate is the only tool But let me now return to Figure 1 and the discussion I started with. Stabilising two cycles – the business cycle and the credit cycle – with the aid of only one tool – the policy rate – is of course not easy.

Central banks after the crisis – increased differences and country-specific solutions Let me conclude by returning to the question I asked at the beginning – whether the central banks will conduct their operations differently after the crisis than they did before. The answer to that question is that it all depends. It is quite clear that a general conclusion from the crisis is that greater effort must be made to stabilise the credit cycle by preventing overly rapid upturns. However, the role given to the central bank in this regard varies from country to country. In some countries, the task has been more or less entirely allocated to the central bank, while in other countries the central bank has a less prominent role. One consequence of this is that, while there was a trend prior to the crisis for central banks’ policy to look increasingly similar – with flexible inflation-targeting as a basic model – it appears as though the trend is towards greater differences after the crisis. Flexible inflation targeting is still the linchpin, but as management of the credit cycle differs between the  16  See, for example, Blanchard, Dell’Ariccia and Mauro (2013), Carney (2013) and Stein (2013). 17  Jeremy Stein at the Federal Reserve's Board of Governors has expressed it as the advantage of monetary policy being that it “gets in all of the cracks” (Stein, 2013, p. 17). The Riksbank has also raised this argument in various contexts, see for instance, Ingves (2010) and Nyberg (2011).
The bank can sell its credit risk on the company, entirely or partially, without needing to cancel the loan or to have any discussion at all with the company. At the same time, the buyer of the credit risk (the seller of the credit derivative) does not need to tie up more than a fraction of the capital that would have been required to take over the credit directly. Moreover, the buyer of the credit risk can in turn easily sell the risk to another party, wholly or partially. Reinsurance thus becomes both simpler and cheaper to manage than with regard to traditional credit insurance. Large investors such as mutual fund companies and insurance companies often want to have a particular amount of credit risk in their portfolios. The credits can actually reduce their total risk, as the prices of the credits do not have such large covariation with other prices, for instance, the prices of shares and real estate. A certain share of credits provides a more diversified portfolio, which gives lower risk for a given expected return. Credit derivatives also makes it possible to divide up credit risks into small parts and to trade these parts at a low cost. This is not possible with traditional credit insurances. As the trade is so extensive, the pricing of credit risk becomes much improved. From the economy’s point of view, it is essentially positive that the credit risk is spread to institutions outside of the bank system.

Although the banks are specialists in assessing credit risk, they are also sensitive to shocks. Deposits are liquid, while loans are in practice often tied for long periods. If the depositors suddenly want to withdraw their money, it may be difficult as the bank cannot as quickly call in all its loans for payment. In addition, the banks are of vital importance for ensuring that payments in the economy function. The fact that credit risks are spread to other institutions with significant equity, such as insurance companies, may thus reduce the risks in the financial system. How has the credit derivatives market developed? Since its start in the mid-1990s, international trade in credit derivatives has expanded enormously. Developments have been particularly dramatic over the past five years. The outstanding volume in the credit derivative market has in round figures doubled every year since 2002 and amounted to almost USD 12,000 billion at the end of 2005. This incredibly large figure can be compared, for instance, to the total value of the world’s stock markets, which at the same time amounted to just over USD 40,000 billion. Market growth has remained high since 2005 and shows no sign of slowing down. Perhaps the most important explanation for the large expansion in recent years is that the market has become increasingly standardised. This has made trading at a larger scale easier. 2  2  If the bank does not own the bond in question it can buy one on the market.
David Willetts, for example, emphasises the role of universities with just as much vigour as Newman in his recent book, A University Education. 54 55 56  See, for example, Acemoglu and Restropo (2018) for an organising theoretical framework. For example, Acemoglu and Restrepo (2017), Susskind and Susskind (2015). Martinelli (2017) and Standing (2017), for example, discuss universal basic income. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  (a) Human Capital Let me start with human capital, workers’ skills and experience. Two fundamental shifts in the jobs and skills market are likely in the period ahead. The first is demographic. A young person born today can be expected to live a 100-year life. 57  That being the case, it is likely they will have a career of 60, perhaps 70, years. Given changes to the future world of work, multiple changes of career, not just job, are likely during a lifetime. This has never before happened in human history. The second secular shift is in the demand for skills. In the past, this skill-shift has been uni-directional. There has been a secular rise in demand for cognitive skills and a corresponding decline in demand for technical skills involving routine and repetitive tasks. That is why cognitive skills have attracted a rising wage premium (Chart 6). Put differently, demand for skills of the “head” (cognitive) have dominated those of the “hands” (technical) and, to lesser extent, those of the “heart” (social) over the past 300 years.

Chart 7: Productivity levels relative to the US Per cent 100% 90% 80% 70% 60% 50% AEs  40%  EMEs  30% 20%  World  10% 0% 1950  1958  1966  1974  1982  1990  1998  2006  2014  Sources: Penn World Tables 9.0 and Bank calculations. Notes: Median TFP level at current PPPs; USA = 1  31  All speeches are available online at www.bankofengland.co.uk/speeches  31  Chart 8: UK and Germany firm-level productivity (Productivity Leadership Group (2017))  Sources: McKinsey & Company Inc. analysis of Orbis (2013) data, as shown in Productivity Leadership Group (2017). Available at: https://www.bethebusiness.com/wp-content/uploads/2018/04/how-good-is-your-business-really.pdf  Chart 9: Enterprises’ broadband connectivity by firm size in 2016 for OECD countries Per cent 100  90  80  70  60  50  All enterprises  10-49 employees  50-249 employees  250+ employees  Sources: OECD  32  All speeches are available online at www.bankofengland.co.uk/speeches  32
Employment, measured as the number of hours worked, increased at an unexpectedly high rate and productivity growth last year was weaker than expected in the Report. The National Institute of Economic Research’s business tendency survey for February shows a clear slowdown in economic activity in the business sector as a whole. The business tendency survey suggests that employment has continued to increase, but at a slower rate. Companies have adjusted their recruitment plans downwards ahead of the coming months. In contrast, the purchasing managers index displays a more positive view in February. The total index rose somewhat and during several months fluctuated around the level of 55, which is close to the average since 2001. However, at the same time, the survey shows that growth in employment has slackened and that companies have become less optimistic about output growth in the future. In January inflation in Sweden was somewhat lower compared with the forecast in the Monetary Policy Report. However, this was largely connected with the fact that the weights in the CPI basket, as at the end of each year, had changed. The effects of this change were unusually large this time. This could be interpreted as though consumers, to a greater extent than normal, have replaced goods and services that increased rapidly in price in their consumption. The so-called substitution effect was then greater than the Riksbank and most other analysts had assumed.

The Bank of Albania will constantly monitor and confirm that you are taking the necessary concrete measures to maintain and improve the capacity to constantly generate a positive financial result, by preserving the assets’ quality and the liquidity indicators. If necessary, being the regulatory authority of the banking sector, the Bank of Albania will orient and support these measures through constant revision and creation of necessary regulatory stimuli. BIS Review 120/2008  5