samchain/econo-pairs-v1 huggingface dataset:
This occurs because all firms assume a worst-case scenario – that they will be unable to access liquidity when required – and this causes them to hoard liquidity. Alternatively when information is dispersed across a large number of people, each with a noisy signal about economic fundamentals, outcomes may be determined by an “information cascade”, the outcome of which is hard to predict (Banerjee, 1992; Bikhchandani et al, 1992). 5  See May and Arinaminpathy (2010) for a model of the financial system which makes this distinction. 4  BIS Review 36/2010  There is strong experimental evidence that people are subject to biases when collecting and processing information under uncertainty, and that such processing occurs only intermittently. 6 The evidence suggests that people are also frequently incoherent in assessing, assigning and processing probabilities – even in highly artificial settings where information is complete – and find it particularly difficult to assess probabilities which are very low or very high, partly because there is less scope for learning in these cases. There is also evidence that, when making complex decisions or without full information, such as when deciding whether to have eye surgery, people often use rough heuristics, or go on first impressions, appearances, gut instinct or intuition. We want to highlight four main aspects of the behavioural view: (i)  Perceptions of risk have been shown to be unduly influenced by recent or personal experience.

In particular, economic outcomes are sensitive to the way people behave under uncertainty, and to their beliefs about the past, present and future. Perceptions of uncertainty affect behaviour. If enough people are uncertain about their future job prospects and save more as a precaution, that may lead firms to cut employment, so increasing the chance that jobs are indeed lost. But uncertainty about whether it will rain today does not change the weather. Beliefs adapt over time in response to changes in the environment; and this in turn affect show economic systems behave. Because the surrounding environment can affect economic decision-making, there are probably few genuinely “deep” (and, therefore, stable) parameters  3  This particular example is fortuitous for earth science and biology, since it helps us date rocks and the fossils they contain and chart continental drift, based on the history of changes in the magnetic field of the earth. BIS Review 36/2010  3  or relationships in economics. In contrast, in many settings in the physical sciences there are stable “rules of the game” (e.g. the laws of gravity are as good an approximation one day as the next). The study of decision making under uncertainty has a distinguished ancestry in economics. Frank Knight (1921) wrote about the difference between risk (where frequencies could be used to calculate probabilities) and uncertainty (where there was no objective basis on which to derive probabilities).
1 The market value of most carbon-intensive industries has already been impacted. And re-pricing may occur rapidly and abruptly. What is less clear at present is how we should react to such a development since the horizon at which climate change risks materialise largely exceeds the traditional horizon of most economic agents, and notably financial players. This is what Mark Carney famously referred to as the “tragedy of the horizon”. 2 We all agree that a higher carbon price would send the right economic signal. But we are aware of how difficult international decision-making is in this area. Given my responsibility, and while awaiting such decisions, the following questions thus arise: how to ensure that investors and financial intermediaries are aware of their actual exposure to risks? And how to prevent a misallocation of capital to carbon-intensive sectors or stranded assets? To address these questions, I will start by stressing that, fortunately, the financial sector and civil society are already mobilised (I). Next, I will discuss the need for public intervention to ensure an alignment of interests (II). I/ The financial sector and civil society are already mobilised. 1  Cf. Moody’s, “Impact of carbon reduction policies is rising globally”, March 2015. 2  Mark Carney, “Breaking the Tragedy of the Horizon – climate change and financial stability”, speech given at Lloyd’s of London, 29 September 2015. BIS central bankers’ speeches  1  This mobilisation, which has yielded progress, appears to have occurred in three main phases.

There are also many indications that the covariance between Sweden and the euro area will increase further if we join the Eurosystem, as trade and integration with the euro countries would be strengthened. Increased trade and greater openness to the outside world have positive effects on the development of growth and incomes. In my opinion, the European integration of which EMU forms a part should not stop at the borders of the EU, but be the first step towards greater global openness. Conclusion I have today accounted for the current monetary policy situation in Sweden and the assessments that formed the basis for our decision last week to leave the repo rate unchanged. A low inflation rate (2%), which is the target for monetary policy, does not in itself create good growth and welfare; it should rather be seen as a fundamental condition to ensure that other parties - trade and industry, organisations, government and parliament - are successful in working to improve Sweden’s economy by various different means. In other words, it is an extensive and complicated interplay that will determine how well a country’s economic potential is realised. The Riksbank does its best to ensure that monetary policy provides a contribution here. Thank you for listening! 1  EMU commission of enquiry report SOU 1996:158. BIS Review 37/2002  7  1.
This means facing up to transition now, taking action to ensure new issuance moves to robust alternative rates and concrete plans are in place to deal with  7  https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2020-0623/HCWS307/  8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  legacy exposures. The UK Government announcement on its intention to legislate and the finalisation of the ISDA protocol are important steps in the ‘endgame’ becoming clearer. There is more to do and work is underway to remove the remaining barriers to transition. After John has spoken we’ll be joined by the chairs of the UK and US industry groups who continue to lead this work, building consensus on key areas such as product conventions and cash fallback mechanisms. Hopefully, the message is now clear to those who have remained on the side-line: this is a necessity not a choice and there are eighteen months left to transition. And, for the avoidance of doubt, I’m taking it that eighteen months in Libor is past the middle of the seventh, so you don’t need to get up now, stretch and sing ‘Take Me Out to the Ball Game’ before John speaks. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9

In addition, an upswing is likely to be held back by product and labour market rigidities. BIS Review 19/2002  1  So all in all, it is hard to see how the coming economic upswing can be as rapid as earlier recoveries. But the world economic picture is now appreciably brighter than last autumn and the outlines of an upturn are becoming increasingly clear. Inflation in Sweden is high If the picture we present in the Inflation Report holds good, the present cyclical dip in the Swedish economy will turn out to have been the mildest for over thirty years. GDP growth was admittedly subdued in 2001 but the figures from Statistics Sweden do not show any negative rates. Neither has the labour market deteriorated as much as usual. Nor have any serious imbalances arisen. So thus far there is reason to be positive about the economic situation; most leading indicators point to an economic recovery, with an upturn in activity during 2002. There is, however, the problem that inflation has for a time been clearly above the Riksbank’s 2 per cent target. To a certain extent the comparatively high inflation can be explained by various supply shocks that have raised the prices of electricity, meat, fruit and vegetables, for instance. The background to these shocks includes the previous winter’s low precipitation for hydroelectric power, livestock diseases and poor harvests due to last autumn’s unusually cold weather in Europe.
The FPC has published its assessment of Brexit risks and it’s ‘Checklist’ of actions necessary on both sides of the Channel regularly since 2017. The FPC also published, in response to a request from Parliament, its severely adverse Brexit stress scenarios. This approach has not been without some criticism – in the UK and in the EU. I would argue however that not only is it our statutory duty to report on risks to financial stability but that by making our assessments public we have encouraged others to prepare for the risks.3  And by making transparent not just our assessment of the resilience of the financial system but the assumptions and judgments that underpin them, we reduce risk by ensuring people can have confidence in the system even if it comes under severe stress. Looking further forward, there are two Brexit related financial stability risks that may surface after we have left the EU. The first are the risks that may arise from our future relationship with the EU. The choice of that relationship is for government and parliament and not for central bankers. It will need to balance very different economic and social objectives on which views are, as we have seen in recent months, very divided. Financial stability, which is my responsibility in the Bank, is I think an important consideration in that equation, but it is only one consideration.

29 There is no contradiction between regulation for safety and prudence vis-à-vis regulations that are open to, or supportive of, good financial innovations. These may be new business models or use of a technology that promote competition, improve customer experiences or simply a more efficient or pleasant delivery of services. So far from adopting a Luddite instinct, many financial regulators have in fact set up dedicated teams to both support and to monitor new FinTech developments. 30 But as with any innovation in any era, FinTechs can also bring about new risks. In this regard, international organisations such as the International Monetary Fund, FSB, IOSCO and the Basel Committee have all produced several useful public reports on the potential risks. 31 As examples of new risk typologies, there may be increased vulnerabilities to anti-money laundering and efforts to counter the financing of terrorism, given the anonymity of digital currencies. Cyber-security is another area as FinTechs vary in size and risk management capabilities. There can also be an increase in macro-financial risks from contagion, procyclicality, or excess volatility given the increased speed of financial transactions, and new networks of relationships. Open banking and the ease of moving funds can also lead to potentially destabilising movements of money, posing liquidity risks. 32 I welcome more research and studies to guide such developments. It is probably too early to determine whether and how FinTechs or BigTechs may change the behaviour of incumbent financial institutions.
Against this background, assuming a limited amount of further easing and constant policy rate until the end of 2010, medium-term forecasts suggest that, with 70 percent probability, inflation will be between 5.0 and 6.0 percent with a mid-point of 5.5 percent at the end of 2009, and between 3.9 and 6.9 percent with a mid-point of 5.4 percent by the end of 2010. Furthermore, inflation is expected to decline to 4.9 percent by the end of 2011 and to 4.8 percent by the third quarter of 2012 (Figure 35).

As oil and gas production gradually dwindles, Norway’s petroleum wealth will continue to generate profits in the form of income from the fund. Chart: Per capita GDP. Norway and other countries – 1970 and 2015 The discovery of oil marked the beginning of an extraordinary era for the Norwegian economy. Before oil was discovered, the income level in Norway was low compared with other western countries. Today, the picture has been reversed. We have gradually caught up with the wealthiest countries. Norway’s GDP per capita is one of the highest in the world. Chart: The 1000-krone banknote (The Ocean Wave) For over a thousand years, the sea has been the source of our wealth and the basis of our contact with the rest of the world. New industries and new technology are redefining our coastal and maritime economy. When the Norwegian economy has been hit by waves, we have used the force of those waves to move forward. And we will continue to do so in the years ahead. The shipping industry is one of the world’s most advanced in terms of developing energy-efficient vessels. The pharmaceutical industry is conducting research into the effect of marine-derived products on a variety of diseases. Wind and wave power will be sources of clean and renewable energy. At the same time, climate change and the loss of biodiversity present challenges that must be met. A continued commitment to maritime and marine research in the years ahead will be an important contribution to maintaining sustainable development.
This was not a given as we were heavily reliant on foreign capital and expertise in the first years of oil activities. But decisions were taken early on in favour of substantial government ownership, high taxation of production profits and skills transfer requirements, which were in many ways in keeping with Norwegian traditions. The roots can be traced back to concession policy and hydropower management, and to the post-war focus on collective solutions. It was also broadly recognised that economic gains from the use of natural resources, economic rent, should be returned to society. The value of the fund is now more than three times annual mainland GDP. The fund has grown bigger than total net household wealth, including housing wealth (Chart 9). This means the fund has an interesting distributional aspect. While the richest decile controls half of household wealth, we all benefit from the fund. 8  NORGES BANK  Chart 9 ... and larger than household wealth. Share of mainland GDP. 350 300  1)  Percent 350  Net household wealth  ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  300  GPFG value  250  250  200  200  150  150  100  100  50  50  0 1998  2001  2004  2007  2010  2013  2016  0 2019  1) At 30 September 2019. Net household wealth is the sum of net value of household assets from the financial accounts and an estimate of the value of their dwellings.

6  1)  Percent 6 Policy rate Capacity utilisation  5  5  4  4  3  3  2  2  1  1  0  0  2005  2008  2011  2014  2017  ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  2020  Capacity utilisation is Norges Bank's output gap projecton for the Norwegian economy. Source: Statistics Norway  The primary responsibility of monetary policy is to provide the economy with a nominal anchor, quantified as the Bank’s inflation target. Monetary policy can contribute to high and stable output and employment and to counteracting the build-up of financial imbalances. In normal times, monetary policy is the first line of defence in stabilising the economy. The policy rate can be changed quickly when the economy is exposed to shocks. Given the structure of the Norwegian credit market, where floating interest rates predominate, the policy rate is an effective tool. The inflation targeting regime must be flexible. Norges Bank’s close to 20 years’ experience with inflation targeting suggests that a small, open economy must expect inflation to deviate fairly widely from the target from time to time. However, inflation has remained within a range where deviations from the target cannot be said to have entailed material economic costs. This has provided leeway to give weight to other considerations in interest-rate setting. During the most recent downturn, the krone exchange rate fell in pace with oil prices. This led to prospects for higher inflation.
On top of all this, in the middle of the recession, Spain’s public finances worsened markedly from a surplus of nearly 2% of GDP in 2007 to a deficit of more than 11% of GDP in 2009, and, in addition, the severe job destruction over the last five years has raised the unemployment rate to over 25% of the labour force. The labour market was also subject to certain illusions during those years. The enormous growth in the construction sector lay, without a doubt, behind the major immigration flows, and this strong population growth drove buoyant consumption and, by extension, the increase in activity and employment in all sectors, delaying the reforms that would have led to a more balanced adjustment between wages and employment. To overcome the crisis further reforms are needed at the national and European levels However, it should also be noted that the size of the imbalances that built up in the Spanish economy was not only a consequence of insufficient adaptation to the conditions and restrictions of euro area membership. They are also related to the deficient functioning of the disciplinary mechanisms with which the euro area is equipped and the fragilities inherent in its institutional design and its system of governance. Hence the Spanish crisis is closely related to the euro crisis, and overcoming it also depends on Europe’s ability to respond to the institutional problems of the Monetary Union.

It is an indispensable part of our efforts to make Singapore a premier financial hub in Asia, and we have every confidence in getting there. 6  BIS Review 14/2001
Monetary policy must then be adapted in order to counter inflationary pressures. A higher interest rate compared with other countries may result in a nominal appreciation. This leads to deteriorating competitiveness and contributes to reducing employment in the exposed sector. How quickly this takes place will depend on the monetary policy tightness required to counter price and wage pressures. Conclusion We live in an uncertain world. The economy will constantly be exposed to shocks of different types. We must be prepared for changes in the functioning of the economy over time. No one knows precisely how different shocks will affect the economy or what effects fiscal and monetary policy instruments will have. A stable operating environment in the form of a predictable monetary and fiscal policy contributes to reducing some of this uncertainty. This is a benefit for economic agents. Monetary policy decisions are also made under uncertainty. This is the most important challenge we face in the formulation of monetary policy. Given the phasing in of petroleum revenues now being planned, fiscal policy will be expansionary for many years ahead. This will contribute to stimulating domestic demand and thus influence monetary policy’s scope for manoeuvre in the medium term. Monetary policy must be tighter than it otherwise would have been. The consequences of using a growing portion of petroleum revenues will be a challenge to many, including the labour market, the business sector and political, decision-making bodies.

Link to the monetary policy strategy  The first cornerstone of the our exit strategy is the link to our primary objective and thus to our monetary policy strategy. Evidently, the crisis has not changed the ECB’s primary objective. Our actions have resolutely been taken with this primary objective in mind: to maintain price stability in the euro area over the medium and longer term. By implication, any non-standard measure whose continuation would pose a threat to the achievement of price stability must be undone promptly and unequivocally. At the same time, if no such risk existed, a non-standard measure could be maintained in case we continue to see significantly abnormal tensions, credit dislocations and impairment of the monetary policy transmission mechanism. But financial institutions ultimately need to stand on their own two feet. Central banks can and have provided support to market functioning. But ultimately market activity relies on the confidence and trust of market participants themselves. 2. The design of the ECB’s measures  The ECB’s non-standard measures were designed with exit considerations in mind. There was a strong consensus to embark on such policies that would prove unproblematic to unwind at a later stage. In this sense, the design of the non-standard measures was chosen to facilitate a smooth exit, representing the second cornerstone to be kept in mind.
The banking system’s claims on companies are forecast to increase by 7–11% this year, and those on households — by 14–18%, largely as a result of the accelerated expansion of mortgage lending. As regards fluctuations in banking sector liquidity observed in recent months, they had no impact on monetary conditions. As before, the Bank of Russia preserved money market rates close to the key rate. This became possible owing to the streamlined operational procedure which is efficient amid both a deficit and a surplus of liquidity. Today, we have published the Bank of Russia’s updated baseline forecast. It relies on the following assumptions: First of all, external conditions have become more promising. The global economy is expected to grow faster owing to mass vaccination and additional fiscal stimuli in advanced economies. This will strengthen external demand for Russian exports. Therefore, we have increased our forecast of oil prices from 45 to 50 US dollars per barrel for 2021 and 2022. Nonetheless, our forecast remains conservative given the high uncertainty about a potential further spread of the pandemic. According to our estimates, a faster recovery of the demand for oil may translate to a greater extent into a rise in oil output rather than oil prices. 2/3  BIS central bankers' speeches  As regards the 2022–2023 horizon, our forecast remains unchanged. The economy will expand by 2.5–3.5% in 2022 and by 2–3% in 2023.

Given increased inflation expectations and supply-side restrictions, these factors may have a longer-lasting effect on prices. The pass-through of last year’s ruble depreciation to prices still continues, although it is waning. Recently, prices could be affected not only by ruble exchange rate fluctuations in 2020 H2, 1/3  BIS central bankers' speeches  but also its weakening in spring, when enterprises were unable to revise their prices immediately due to a slump in demand. Eventually, the combination of the two episodes of the ruble depreciation may be a reason why inflation expectations will stay elevated for a longer period. Upward pressure on domestic prices persists due to the situation in global commodity markets, first and foremost in food markets. Food prices have risen because of reduced inventories and unfavourable weather conditions. Moreover, the growth of prices for cereals increases costs in meat product manufacturing and is not only a proinflationary factor in itself, but it may also entail secondary effects. It is worth noting that the new mechanism of export duties in grain markets will smooth out the influence of global price fluctuations on domestic prices. Finally, inflation is still affected by a group of factors associated with the epidemic situation. It includes staff shortages in a number of industries, increased costs incurred by companies to comply with sanitary and epidemiological rules, and persistent temporary delays in supplies due to disruptions in logistics chains. These are supply-side factors putting upward pressure on inflation.