samchain/econo-pairs-v1 huggingface dataset:
In my opinion, it is therefore not possible to claim that an economic policy that aims for low and stable inflation would in itself lead to higher unemployment. 2  BIS Review 52/2007  Another part of the criticism is based on the assumption that it is not possible to buy lower unemployment by pushing up inflation, although there is instead apparently an assumption that if only the Riksbank would ensure that inflation remains at 2 per cent, then unemployment would stabilise around its long-term equilibrium level. In practice, however, there is no such simple relationship between inflation and unemployment. Firstly, unemployment is affected by a number of factors other than inflation, most of which have nothing to do with monetary policy, such as productivity changes, changes in regulatory systems and various shocks that regularly impact on the economy. Similarly, inflation is affected not only by developments in the labour market, but by many other factors. Empirical studies have shown that unemployment “explains” a relatively small percentage of total inflation. This means that inflation developments are largely “explained” by other factors than unemployment. Secondly, it has proved very difficult to assess what is a long-term equilibrium level for unemployment and moreover that this also varies over time. One conclusion of this is that even if the Riksbank were to always succeed in holding inflation at the target, this would be no guarantee that unemployment would be low and stable.

Namely, the final report on the Needs Analysis Programme for the National Bank of the Republic of Macedonia contained 138 recommendations addressing the gaps in terms of the EU benchmarks established in 11 areas of central banking. It is my pleasure to point out that some of them have already been implemented, and some of them have been incorporated in the Strategic Plan of the NBRM, that is in the National Bank’s Plan of Activities for this year. However, the overall implementation of the recommendations will require additional technical assistance in terms of experience and knowledge of the ECB and the national central banks of the EU. Therefore, the inclusion of the NBRM in this regional project, which aims to facilitate the preparations for the implementation of the recommendations we received in the report on the Needs Analysis Programme for the NBRM, by establishing a Plan for their implementation, is very important. It will be the basis for the preparation and the implementation of a subsequent project, as well as the basis for further planning and promotion of the bilateral cooperation with the central banks with which the NBRM already has a traditional cooperation, but also for the establishing of a cooperation with other European central banks. The implementation of these and similar projects by the ECB and the EU in recent years, unequivocally confirms their continued determination, commitment and dedication to assist the central banks of the Western Balkan countries on their way to joining the ESCB, and later the Euro system.
Given its size and lack of natural resources, it is not surprising that Malta has one of the most open economies in the world, with imports and exports each almost as large as the GDP. The EU is Malta’s main trading partner, accounting for over two-fifths of exports and two-thirds of imports in 2003. It is an even more important market for the tourism industry and is a major source of capital investment. For Malta, therefore, the prospect of being anchored in the relative safety of the world’s second largest economy and of using that economy’s currency represents a considerable advantage. Perhaps the foremost benefit of euro area membership is being able to share in the credibility of a Europe-wide monetary policy. This will not only mean reduced exchange risks and less uncertainty for economic operators, but also the elimination of the risk premium on the Maltese lira. The resulting reduction in interest rates, moreover, would be of direct benefit in terms of price competitiveness, as would also be the lower currency conversion costs and the increased price transparency. The euro should also act to spur the integration process with the EU since it is known that trade and investment flows tend to increase in the absence of exchange rate volatility, and also that the trade of countries sharing a common currency can be as much as three times higher than that of countries with different currencies. The Maltese economy is relatively well placed to secure these benefits of monetary union.

I dwell at some length on this issue because the state of public finances is currently the only significant impediment to Malta’s membership of the euro area. While it is encouraging to know that we have been able to reduce the fiscal deficit/GDP ratio from 11% in 1998 to its current level of around 6%, getting to the Maastricht reference value of 3% by 2006, as the Government plans to do, will require unrelenting efforts and a greater emphasis on expenditure-cutting. This is not only because taxation levels are already relatively high for an economic downturn, but also because of the tradeoffs involved in pursuing further fiscal consolidation. Indeed, the Government’s resolve to trim the deficit will be a key determinant of the degree of exchange rate stability that it will be possible to achieve during ERM II. This, in turn, will depend on how much economic operators, taxpayers and recipients of social benefits and other transfer payments are prepared to give up today in exchange for sustainable public finances tomorrow. In the final analysis, therefore, the success of the euro strategy will hinge on consensus being reached on the implementation of the necessary reforms. In this context, discussions are underway in the Malta Council for Economic and Social Development with a view to reforming the pension and health systems, currently two major sources of pressure on public finances. If the social partners do indeed take ownership of the reforms, the credibility of the country’s overall economic strategy will be considerably enhanced.
5 E. Fuentes Quintana (1948), “Efectos económicos de la política fiscal: comentario a las tesis suecas”, Anales  de Economía, vol. 8, no. 32 (October-December), pp. 487–497. 6/6  BIS central bankers' speeches

The fact that both public and private indebtedness had followed an unsustainable pace of growth over the previous decade then makes area-wide adjustments both necessary and painful. Among the factors that contributed to the excess of the pre-crisis period stands in my view the misleading belief that sophisticated financial engineering was able to achieve close-toperfect risk diversification and market completeness led in fact to excessive risk-taking by banks. This is in sharp contrast with the current situation, in which investors have doubts about even the risk-freeness of sovereign bonds of developed economies. Restoring market confidence is a difficult and potentially lengthy task. That said, all actions that are consistent with the commitment of governments to address national fiscal imbalances and structural impediments to real growth are likely to accelerate this process. Besides, it is clear that nominal long-term anchors are also of the essence to reduce uncertainty and facilitate such reforms. The primary mandate and the best possible contribution of the Eurosystem is precisely to ensure price stability in the medium run. Then, to the extent that dysfunctional financial-markets are likely to jeopardize our ability to maintain stable prices in the medium run, the Eurosystem must intervene. This analysis has motivated our decisions in the past and will continue to motivate future ones. This brings me to the second part of my talk today. 2.
Yields on government securities are at their lowest-ever levels (Chart 19), as are yields on investment-grade corporate bonds. Borrowing costs for households and smaller businesses have not fallen as far as for governments or larger companies. That explains why, despite monetary easing, overall credit conditions are somewhat tighter than at the start of the year. Nonetheless, the overall monetary stance, in the UK and globally, remains highly accommodative by any historical metric. For example, real interest rates in the UK have fallen into even more deeply negative territory since the Covid crisis (Chart 20). 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Chart 18: Global financial conditions index Standard deviations from historic average  7 6 5 4 3 2 1 0 -1 -2  1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Sources: Bloomberg Finance L.P., Eikon by Refinitiv and Bank calculations. Notes: Financial conditions indices (FCIs) estimated for 43 economies using principal component analysis. The FCIs summarise information from the following financial series: term spreads, interbank spreads, corporate spreads, sovereign spreads, long-term interest rates, equity price returns, equity return volatility and relative financial market capitalisation. An increase in the index indicates a tightening in conditions. Series shows the average of all country FCIs, weighted according to their shares in world GDP using the IMF’s purchasing power parity (PPP) weights.

In any event it will be fascinating to see what other contracts emerge over the coming months. Of course, not all contracts that are launched will be successful, and it’s interesting to reflect on what makes a successful derivative contract. Lessons can often be learned from looking back to the past. Not far from this location is the home of the London Metal Exchange. Its origins can be traced back to 1571, when traders in metal and a range of other commodities began meeting at the Royal Exchange. What was originally a domestic market in physical metal became a major global market, and by the early 19th century traders had been forced to use nearby coffee shops. As the UK started importing large quantities of metal from abroad during the Industrial Revolution, the need emerged for importers to protect themselves against price movements during the long voyage from places like Chile and Malaysia. The “futures” market which developed from those humble beginnings continued to grow and, in 1877, the London Metal Exchange Company was formed. That market was successful for a number of reasons. Volatility in the price of the underlying product made the contract attractive to hedgers and speculators alike. Technology - the telegraph would you believe! - encouraged the market’s growth by making shipment arrival dates more predictable. The LME had a first mover advantage that still stands. Liquidity flourished as traders followed one another in using the new market.
Economic forecasting, as I have now learned, is a tricky business, not the least with a highly volatile component like private investment. In assessing future investment trend, we at the Bank of Thailand look at key investment determinants, including the return, cost of capital, and confidence factors. Judging from the recent trend as well as outlook for each of the determinants, we have come to conclude that the prospect of a continued and robust growth of capital spending is good. In terms of return, corporate profitability is up, and marginal return to new investment is likely to be on the rise in line with a steady increase in the capacity utilization rate. The low interest rate environment helps reduce the cost of capital as well as improve firms’ liquidity and leverage position. Progress on corporate debt restructuring and the budding growth of bank credits to the industrial sector are also likely to help relax firms’ financial constraints further. This means easier acquisition of the funding for new projects. Moreover, business sentiment as measured by the Business Sentiment Index is on a general rebound. Therefore, barring no major disruptions to the recovery process coming from abroad, I expect private investment to come into the limelight, replacing private consumption as the main driver of growth in the period to come. That is to say, in terms of growth drivers, we should soon graduate from the combination of export and consumption to the combination of export and investment.

In the initial period after the introduction of an inflation target in 2001, it appeared that the social partners had not yet internalised the response pattern ensuing from the monetary policy mandate. We are now well into a cyclical phase with very high capacity utilisation and low unemployment. In this situation, there may be a risk that wage growth will again accelerate. On the other hand, the experience gained by the social partners that large pay rises push up interest rates may have the effect of curbing pay increases. In local wage negotiations at enterprise level, competition, the supply of foreign labour and the possibility of outsourcing or relocating activities abroad may dampen the impact. The inflation target of 2.5 per cent provides a framework for the social partners. Over time, nominal wage growth above 2.5 per cent will mean higher real wages and higher purchasing power. Real wage growth that exceeds productivity growth can lead to higher inflation and higher interest rates. In government-financed enterprises – often labour-intensive – budgets are adjusted to the wage growth expected by the Government. This is usually in line with assumptions about cost inflation in the economy as a whole and with the inflation target. If wages rise more sharply, efficiency must be increased in order to minimise the adverse impact on service production and customers. Norges Bank's most important instrument is the interest rate on banks' deposits with Norges Bank (the sight deposit rate), also referred to as the key policy rate.
Such operations have reinforced the perverse link between banks and sovereign debtors and may be considered a violation of the prohibition of financing public debt with central bank money, laid down in Article 123 of the Treaty. And, the opposite – but conceptually equivalent – criticism that these operations did not provide the economy with finance. As regards the first point, it is again pertinent to refer to strategy: in the medium to long term, the inflation dynamic reflects developments in broader monetary aggregates. Conditions that encourage the creation of inflation or speculative bubbles are generated by strong and sustained growth in money and credit, not necessarily as a result of an increase in liquidity granted by the central bank to the banking sector. This liquidity constitutes a precautionary supply for sight liabilities that the banks have towards households, non-financial corporations and other banks. The sight liabilities, i.e. deposits, and not the supply of liquidity, demonstrate a high statistical correlation to the price dynamics of goods and assets. Today, monetary developments do not allow for the identification of risks of inflation or pressure on asset prices in the medium term. As regards the second point, the main criticism related principally to the expansion of collateral accepted by the national central banks of the Eurosystem as a guarantee in return for liquidity extended to credit institutions. In particular, doubts were raised regarding credit claims that became eligible with the decisions taken in December 2011.

Household debt ratio Debt as a percentage of disposable income 350  350  Finland France Germany Portugal Italy Ireland Spain Denmark United States United Kingdom Sweden  300  250  300  250  200  200  150  150  100  100  50  50  0  0 95  97  99  01  03  05  07  09  11  Source: OECD Figure 6. Unemployment Unemployed as a percentage of the labour force, index, 2007 = 100 350  350  Ireland (-40.5 percent) Spain (-22.5 percent) Denmark (-23.4 percent)  300  300  United States (-22.7 percent) United Kingdom (-13 percent) Sweden (-0.0 percent)  250  250  200  200  150  150  100  100  50  50 00  02  04  06  08  10  12  Note. The figures in brackets refer to the fall in real house prices from the peak to the trough. Source: OECD  BIS central bankers’ speeches  17  Figure 7. No new target for monetary policy Inflation  Unemployment (u)  Scenario 1 Scenario 2  After the forecast period  After the forecast period  u*  2%  Scenario 1 Scenario 2  Slow adjustment to the inflation target and long-run stable development Rapid adjustment to the inflation target but build-up of imbalances that are corrected  Figure 8.
Although during the 2008 MMF run, investors also fled from prime to government MMFs, the characteristics of the run differed substantially: outflows were large but quickly reverted following the guarantee; they largely occurred across—and not within—fund families as investors became wary of particular counterparties; and investors moved to the safest sub-segment of the government MMF industry, that is, funds investing only in Treasuries and Treasury-backed repos. 19 These contrasts further illustrate a difference between investors’ demand for money-like assets in normal times, when regulation changes, and their demand for safety in non-normal times. Public sector provision of money-like assets There is a view that regulation and supervision alone are not sufficient to fully mitigate the financial stability risks associated with private maturity and liquidity transformation, and thus, the official sector should consider providing more money-like assets.20 The argument is that when the official sector increases its supply of money-like assets, it reduces the convenience yield on very short-term securities, thereby weakening the private sector’s incentives to create short-term runnable securities.21 Some recent market pricing helps to illustrate this characteristic.

Federal reserve provision of overnight money-like assets Even without expressly pursuing a financial stability objective, a central bank’s balance sheet can provide safe and money-like assets to a wide range of financial institutions in normal times.23 The October 2008 introduction of the Federal Reserve’s ability to pay interest on reserve balances and the 2013 development of an overnight reverse repo (ON RRP) facility provided critical tools that allow the Federal Reserve to maintain control of overnight interest rates regardless of the size of its balance sheet.24 This ability is important because, before the crisis, the Federal Reserve could not increase the supply of its money-like liabilities in normal times without compromising monetary policy objectives.25 Figure 5 shows the size of selected liabilities of the Federal Reserve before the crisis, in December 2017, and market participants’ estimates for average 2025 levels. 26 Before the crisis, the Federal Reserve’s provision of money-like liabilities other than currency was negligible to ensure control of overnight rates in the operating system used at that time. Reserves were kept scarce in the banking system, and other liabilities—such as the Treasury’s account at the Fed and overnight investments by foreign central banks—were kept very limited, with tight control 6 / 10  BIS central bankers' speeches  around their daily variation.
This question is crucial today because the shocks that have hit the euro area economy in recent years have affected both demand and supply, making the main drivers of inflation harder to identify. We have faced both a series of external supply shocks[6] and a deterioration in the terms of trade which have pushed up costs for firms and weakened demand. This has resulted in an extraordinary rise in energy and food prices, especially after Russia’s invasion of Ukraine. Together, energy and food currently directly account for more than two-thirds of headline inflation (Chart 1). Chart 1 Contributions of components of euro area headline HICP inflation (annual percentage changes and percentage points contributions)  Sources: Eurostat and ECB calculations. Notes: NEIG stands for “non-energy industrial goods”. The latest observation is for October 2022. At the same time, the consumption items benefitting most from the reopening of the economy have made an increasingly relevant contribution to core inflation over time (Chart 2). The combination of this positive pent-up demand shock, pandemic-related supply disruptions and soaring energy prices has provoked a much faster and stronger pass-through of cost pressures, especially energy costs, into domestic inflation than in the past. Indeed, items with a high share of energy in direct costs currently account for around half of the inflation in services and non-energy industrial goods.

According to our projections, real GDP is expected to remain below its pre-pandemic path over the projection horizon, whereas the labour market is expected to remain resilient. [11] However, the relative contributions of supply and demand conditions are likely to change over time. In particular, the release of pent-up demand largely explains the recent contribution of demand to inflation. This is different from a cyclical upswing that “feeds on itself”[12], or a sustained increase in consumption as seen in the United States as a result of a highly expansionary fiscal policy and rapidly rising wages (Chart 4, panel a). That is why, in the euro area, the demand-driven contribution to core inflation has emerged more slowly over time (Chart 4, panel b). But forward-looking indicators point to a significant weakening in demand, which suggests that its contribution is likely to fade out (Chart 5). Chart 4 Evolution of private consumption and demand-driven contributions to core inflation in the euro area and the United States (percentage points contributions)  Sources: Panel a): Eurostat, FRED and ECB staff calculations. Panel b): FRSF/Adam Shapiro, Eurostat and ECB staff calculations. Notes: Panel a): the latest observation is for the third quarter of 2022, except for euro area household and non-profit institutions serving households (NPISH) final consumption expenditure for which the latest observation is for the second quarter of 2022.