samchain/econo-pairs-v1 huggingface dataset:
Perhaps most important, the normal cyclical dynamic in which housing, consumer durable goods purchases and investment spending rebound in response to monetary easing is unlikely to be as powerful in this episode as during a typical economic recovery. The financial system is still in the middle of a prolonged adjustment process. Banks and other financial institutions are working their way through large credit losses and the securitization markets are recovering only slowly. This means that credit availability will be constrained for some time to come and this will serve to limit the pace of recovery. If the recovery does, in fact, turn out to be lackluster, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low for some time to come. This suggests that inflation will be quiescent. For all these reasons, concern about “when” the Fed will exit from its current accommodative monetary policy stance is, in my view, very premature. In contrast, I think it is important to address today the issue of “how” the Fed can exit from the current stance of policy when the time comes, even if its numerous special facilities and purchase programs continue to keep the size of its balance sheet at an expanded level. Why do I believe it is so important to explain the issue of “how” having just argued that “when” is not yet a pressing issue?

The reason is that if people believe – correctly or incorrectly – that the Federal Reserve could have a problem managing a smooth exit from its accommodative policy stance, this belief alone could have the adverse effect of causing inflation expectations to become less well anchored and risk premia on long-dated debt securities and loans to rise. These effects could conceivably make it more difficult to generate a sustainable economic recovery. This risk seems significant. For example, just last week a major bank published a survey of a broad array of 1800 investors. Of those surveyed, 20 percent thought that inflation might average more than 2.5 percentage points per year above their assessment of the Federal Reserve’s target. This outcome presumably reflects two factors – the balance-sheet expansion of the Fed and the large fiscal deficit. With this in mind, let me spend the remainder of my time discussing the sources of growth in the Federal Reserve’s balance sheet over the past year and a half or so, and explain why I am confident that the exit from our accommodative policy stance, as well as from our various lending facilities and purchase programs, can be handled smoothly. As you are aware, the Federal Reserve has been engaged in a wide array of unprecedented activities over the past two years in response to the financial crisis. These include: •  Liquidity facilities designed to improve market function.
Sir Winston Churchill once said, "There are plenty of good ideas if only they can be backed with the power of action". With that, I wish you a fruitful Conference. Thank you. 6  BIS Review 123/2007

In the course of the very powerful upturn in the American economy, significant imbalances have built up at the same time. Among other things, the deficit in the current account has never been as great as it is now, and recently consumption has been increasing more rapidly than household incomes, which means that the savings ratio has been at a record low. Sooner or later these imbalances will need to be corrected. However, a discussion of how this might come about lies beyond the bounds of what I intended to talk about this evening. Are there traces of a “new economy” in Sweden? –  Since Sweden switched from a fixed exchange rate to an inflation target, monetary policy has been designed so as to reach this target and thereby create credibility. Monetary policy has succeeded in stabilising prices and at the present time long-term inflation expectations approach the Riksbank’s target of 2%. The changes in fiscal policy, which have entailed among other things a reform of budgetary procedures and the imposition of a ceiling on public expenditure, have had positive effects. This is manifested, for example, in the budget surpluses now being produced. Overall, we have made good progress towards achieving macroeconomic stability and therefore appear to fulfil the requirements for “good economic policy”, even if we have fulfilled these for a considerably shorter time than the USA. –  If, on the other hand, we look at structural factors, our problems were perhaps also worse from the start.
Developments in recent years are similar to those which caused the imbalances in wage formation in the 1970s and 1980s. Wage increases in this year’s settlement were high. Wage settlements in internationally exposed sectors did not set the trend for wages. Wage increases in these sectors were around 5 per cent, while they were appreciably higher in a number of sheltered industries. In the education sector, wage growth is nearing 8 per cent this year. Adjusted for inflation, this is the highest level of wage growth in any single year since the early 1960s. The central and local government sectors, including the education sector, employ 1/3 of all employees in Norway. In 2002, wage growth for these three groups combined was 6.3 per cent. This is close to 1 percentage point higher than the average for the remaining two-thirds. In rural areas, where local government employment is an alternative to working in agriculture, the fisheries, local service production or small-scale industry, the public sector, with its nationwide agreements, is a wage trendsetter. High wage growth in the public sector will thus determine wage growth in other local sheltered enterprises. Many of these industries may pass on higher labour costs to customers. Wage growth in the public sector may therefore be an important source of higher inflation. Public enterprises can only pass on higher labour costs to customers to a limited extent. On the other hand, the rise in costs can intensify pressures to increase central government allocations.

By focussing on a clear set of research priorities, by opening up our datasets, and by creating tighter links between policymakers and researchers, both within the Bank and across the broader research community, we can all help advance the Bank’s mission – promoting the good of the people of the United Kingdom. Thank you. BIS central bankers’ speeches  5
In November, the Leaders will, at their Summit in Singapore, issue a legally-binding blueprint to implement the ASEAN Economic Community. ASEAN will eventually evolve into a single market with free flow of goods, services, investment and talent. For investors, an integrated market of half a billion people will be an attractive investment proposition. For financial institutions, it will mean more projects to finance and more wealth to manage. ASEAN’s combined GDP of $ is larger than most economies. It is, in fact, bigger than India’s $ and more that a third of China’s $ In addition, the ASEAN Economic Community will boost the region’s GDP by 10%. To benefit from the growth of China and India, ASEAN is negotiating FTAs with these two giants. They are targeted for completion by 2010 and 2011 respectively. Besides China and India, ASEAN is also enhancing links with other economic centres. ASEAN signed a regional Trade and Investment Framework Arrangement (TIFA) with the US last August. It is negotiating FTAs with Japan, South Korea and Australia and New Zealand. And in May, ASEAN and the European Union decided to launch FTA talks. Political coalescence At the political level, Asia is also coalescing. However, political coalescence is progressing more slowly than economic integration. And it will be far less defined and institutionalised than what we see in the EU. Compared to Europe, Asia is more diverse politically and culturally. There are complexities and practical difficulties. However, the basic direction has been set.

Deepening economic integration and interdependency Within Asia, economic integration is deepening, and we are becoming more and more interdependent. Intra-Asian trade as a share of the region’s total trade has grown from 34% in 1980 to more than 50% today. Asia is being woven together by trade and investment flows, MNCs spreading their production chains and a growing web of bilateral and multilateral FTAs (Free Trade Agreements) and regional processes. China plays a critical role in quickening the pace of regional integration. China is serving as a production platform for foreign firms. Many manufacture there. Others export intermediate goods to their affiliates in China for assembly and then shipping the finished products to key export markets in the US and Europe. What we are seeing is production sharing and the intensification of an Asian production network. However, both China and other Asian countries also know that due to China’s sheer size and strategic weight, its re-emergence exerts a displacement effect. To use an image, it is like a huge elephant wading into a pond. This will displace the water and reduce the space of others using the pond. What do we do? We cannot live without water. The answer is to enlarge the pond so that there is more space for everybody. China is conscious of its size. It emphasises peaceful development so that while it displaces, it does not threaten. Hence, China is negotiating an FTA with ASEAN so that its growth will translate into more opportunities for ASEAN.
New houses take time to construct and there are multiple frictions, not least planning and other regulations. This will affect whether a boom in demand for housing is reflected in new building and increased supply, or in upward pressure on prices. There is, however, variation between countries. The literature bears out the intuition that that the more inelastic the market, the greater the impact of demand side factors on price. The UK scores very poorly on elasticity of housing supply. The IMF estimates that the elasticity of housing supply in the UK is about half the OECD average4 (Chart 3). Chart 3: Estimated Long-Run Housing Supply Elasticity  4  Geng (2018), “The Fundamental Drivers of House Prices in Advanced Economies” 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  On the demand side, the fundamental drivers of the market are population and income. But credit conditions and expectations clearly play a role, as do non- credit constrained investors who can arbitrage between the rental and the owner occupied market. It is difficult to disentangle these factors. At a fundamental level demand for housing – whether as a renter or as an owner – is determined by the number of households, their incomes, the housing stocks and households’ intrinsic preferences. And so in areas with rapid population and income growth – especially in areas where supply cannot adjust – we’d expect to see an increase in both rents and house prices.

I thank Euromoney once again for organizing this conference. I wish you productive and engaging sessions today. Thank you. 5
For a start, regulation goes hand in hand with supervision. We will continue to ask searching questions about the quality of a firm’s assets, the rigour of its risk management, the experience on its board, the plausibility of its resolution plan and so on. That is the bread and butter of our role. Meanwhile, the reforms will be treated to revisionist history and the calls of counter-revolution. Now, reasonable people can disagree about the right balance of financial regulation in order to achieve our goals. The most celebrated example of this is how to trade off the cost of higher bank lending rates, which dampens investment in the economy, versus the benefit of reducing the probability or severity of future financial crises. Unless some other breed of revolutionary brings an end to capitalism itself, then I think that debate will go on for a long time after we are all dead. But in my view, the post-crisis reform package – taken as a whole – strikes the right balance between the competing interests present within our mixed economy system. Brexit does not affect this judgement. The UK financial system must be robustly regulated and supervised whatever the outcome of the government’s negotiations with the European Union. As my colleagues on the Financial Policy Committee and I put it last month: “the FPC will remain committed to the implementation of robust prudential standards in the UK financial system.

We revised 2023 and 2024 and ultimately to 2.3% [in 2025] which moved by 0.1 from the previous projections [of 2.2%]. I think on the basis of that you can easily conclude that we are not satisfied with the results of that inflation outlook – which is only one of the three components that we look at. That is the reason why we are making the monetary policy decision that we make today, and why we are thinking that, unless there was a material change to the baseline, we would again hike interest rates in July. I don't want to comment about the terminal rate. This is what markets are considering. 5/10  BIS - Central bankers' speeches  The terminal rate is something that we will know when we get there because it is not what is driving our analysis and our deliberations. What is driving it is the ultimate destination, which is the 2% inflation. That's what we want and there are lots of components that come in to help us arrive at the 2% target. We spent a lot of time on the labour market. We spent a lot of time because it is becoming one of the major components of the drivers of inflation. It was energy for a long time. To oversimplify: energy played a significant role, then food kicked in, and energy is now fading, has moved now in May and is in slightly negative territory.
Like a number of other central banks, we in the Hong Kong Monetary Authority have taken a number of initiatives in this direction in Hong Kong in recent years. We now have a fairly liquid bond market with a sophisticated but user-friendly market infrastructure. We have also taken initiatives in the regional dimension to promote the networking of Asian bond markets through encouraging bilateral linkages of debt clearing systems. BIS Review 55/1997  -2-  7. It is hoped that these efforts could help the expansion of the role of the Asian bond markets and hence facilitate more effective financial intermediation in the domestic, regional and global context. The region’s investment needs over the next decades are huge. The World Bank has estimated that private gross domestic fixed investment will amount to a total of $ 5 trillion over the ten years to the year 2004, a large part of it associated with infrastructural development1. The share of bonds in financing these needs is projected to grow from only 9% to 26% by 2004. 8. I hope this can be realized for this would enable the banks’ role in Asia to consolidate into more prudent proportions at least in the eyes of the regulators. It would help to achieve a more diversified and therefore a more stable framework for financial intermediation. Indeed, on the World Bank’s projections, the share of bank borrowing is expected to decline commensurately from 40% to 30% over the same period. 9.

Mr. Yam looks at Asian banking in a regional and global context Address by the Chief Executive of the Hong Kong Monetary Authority, Mr. Joseph C.K. Yam, at the ADB-IIF Forum on Developing Asian Financial Markets held in Fukuoka, Japan, on 10/5/97. I am pleased to be here this morning to address you on the subject of Asian banking in a regional and global context. I will be speaking particularly about banks in the East Asia region. The importance of banking stability 2. There is increasing international recognition of the importance of a sound banking system in promoting macroeconomic stability, sustainable economic growth and the efficient intermediation between savings and investment. The last few months have seen a series of initiatives by international financial institutions and groupings to devise principles, standards and strategies for the promotion of financial stability. While these initiatives have been directed principally at emerging markets, they also have application to the more developed markets which have been by no means immune from banking problems in recent years. A number of Asian economies, including Hong Kong, have participated in this work. This is a practical recognition that the setting of international regulatory standards must be a broadly-based process, in keeping with the global nature of today’s financial markets. 3. I do not need to belabour the point about the debilitating and disruptive effects which banking problems can have on economic and monetary management. The need to restore the capital of failed banks can impose a heavy fiscal burden.
The analysis of external risks contained in this Report reminds us of the importance of the exchange rate being the first buffer of external shocks, causing the economy to respond through changes in relative prices rather than the levels of demand and activity. Additional evidence presented in this Report shows that countries with a floating exchange rate also reduce the volatility of long-term interest rates, which are a determinant of investment. Moreover, developing market instruments to manage foreign exchange risk generates a stronger basis for the development and diversification of exports than an uncertain state insurance through regular intervention or the fixing of the exchange rate. It is important to recall that the attempts to sustain the exchange rate led the country to a recession in 1999, whereas the float significantly reduced the impact of the crises that originated in Argentina and Brazil in 20012003, the financial crisis of 2008-2009 and the end of the commodity boom in 2014. In each of these last three episodes, the exchange rate float has provided enough room for monetary policy to reduce cyclical fluctuations. Monetary policy and its perspectives are also built using as a working assumption a defined trajectory for fiscal policy. The working assumption in this Report is that in 2018 the economy will receive a fiscal impulse in line with the budget announced by the authority. From then on, it is assumed that fiscal spending will follow the path of fiscal consolidation contained in the Medium-Term Financial Projection of the last Public Finance Report.

Or might there be reasons for Sweden and other countries to specially design our own solutions, over and above those imposed by international regulations? Lending and house prices in Sweden relatively unaffected by the crisis One area where Sweden stands out in comparison with many other countries, is the development of house prices and household indebtedness. As I noted earlier, house prices  1  See, for instance, the report “An assessment of the long-term economic impact of stronger capital and liquidity requirements” by the Basel Committee and the Financial Stability Board (http://www.bis.org/publ/bcbs173.htm). BIS central bankers’ speeches  1  in many countries have fallen heavily after being pushed up in a credit-driven boom over a number of years. In Sweden, too, house prices and lending to households have risen substantially. But here we have not experienced any corresponding fall in housing prices in connection with the crisis; we can just distinguish a minor dent in the curve (Figure 1). Lending to households has also continued to increase rapidly. It has been profitable for the banks to fund the increase in Swedish mortgage borrowing in the international capital markets. Funding in foreign currency has shown an increase trend (Figure 2). This has meant that Swedish households have been able to obtain mortgages at a lower cost and probably to a greater extent than would otherwise have been the case. But this method of funding is not entirely without risk.
The lesson I want to draw from this is not that the problems in financial markets which began in August 2007 and culminated in the near-meltdown of the global financial system a little over a year later were an inherently unpredictable Act of God. Rather it is that one would need to be endowed with perfect foresight to have been able to predict how the financial crisis would unfold, spilling over from one institution to another, and from one market to another. And who knows what would have happened if, for instance, Lehman Brothers had successfully found a buyer that weekend in September 2008? Moreover, the impact on the real sector, which is what concerns us here, was also extremely difficult to judge. While it was predictable that the availability of credit would tighten as risk aversion rose and financial institutions rushed to de-leverage their balance sheets, it was far harder to know by how much. And much of the contraction in household and business spending appears to have been down to a sharp rise in precautionary saving and the postponement of investment projects and the running down of inventories as uncertainty rose. Again, while such a reduction in spending was plausible, it was nevertheless extremely difficult to judge its likely magnitude. The moral from this is that one should not expect to be able to predict the timing and scale of these sorts of events with any precision.

They are also likely to result in more business bankruptcies and fewer new firms being formed, though here the evidence is rather more positive, with liquidations rising much less during the recession than one would expect (Chart 7). Finally, as we saw in the eighties, high levels of unemployment can become entrenched if the longterm unemployed are allowed to become disconnected from the labour market. But, as Chart 4 shows, the rise in longterm unemployment has so far been modest, while the exit rate from long-term unemployment into jobs has been broadly flat. So, at the current juncture, some indicators seem to suggest a rather large margin of spare capacity, while others point to a much smaller margin. Now it may be possible partly to reconcile these apparently conflicting observations once one allows for the fact that in some businesses, especially in manufacturing, it may be possible to shut down some capacity temporarily, reactivating it at relatively low cost once conditions improve. To the extent that the survey responses relate to the immediately operable capacity, rather than potential capacity, it would be possible to have simultaneously a modest margin of spare capacity in the short run, but rather more in the long run. Even so, the generic point remains that we presently have only an imprecise idea of the margin of unused resources in the economy.