samchain/econo-pairs-v1 huggingface dataset:
6  These types of clauses generally entail an automatic transfer of higher future prices to wages, irrespective of the type of shock that causes prices to rise, and therefore generate the above-mentioned second-round effects that we wish to avoid. 7  When settlements that will be effective in 2023 are considered this percentage rises to almost 50%, although the number of such settlements is still limited. 8  For example, the II Agreement for Employment and Collective Bargaining 2012-2014, signed at the beginning of 2012, established wage recommendations that excluded, in the event of energy price increases, like the current ones, the energy component of inflation from wage settlements. 9  Fifth, these wage guidelines should be accompanied by explicit profit-margin moderation commitments. Only in this way can it be assured that the wage moderation is effectively passed through to business competitiveness, at the same time as the passthrough of energy input costs to other goods and services in the economy is limited. Conclusions I shall conclude by underlining the three basic messages of my speech this morning. First, the Russian invasion of Ukraine, besides amounting to an extraordinary human drama for the Ukrainian people, could seriously threaten the social and political project that we have been constructing in Europe in recent decades. From the purely economic standpoint, the gradual recovery that has been taking place in the Spanish and European economy in recent quarters is undoubtedly going to be adversely affected by this armed conflict through numerous channels.

However, various simulation exercises carried out internally at the Banco de España suggest that in some particularly acute scenarios as to the severity and duration of the conflict, GDP losses owing to this channel could be significant. 3  effects across countries, sectors and firms, given that, as I have said, the levels of exposure to and dependence on the Russian and Ukrainian economies vary widely. An optimal response to this shock should mitigate the short-term economic effects and, over the medium term, boost Europe’s strategic autonomy in both energy and defence. In addition, joint European action, through the pooling of budgetary resources, is once again the most effective means of financing the public expenditure stemming from the invasion. A joint response should allow the economies hardest hit by this latest shock to effectively weather the adverse scenario without suffering any persistent deterioration in their economic outlook or future growth capacity, while simultaneously eliminating a new potential source of financial fragmentation in Europe. It should focus on providing support to the firms and individuals most vulnerable to this new shock, in addition to implementing the investments needed to reduce Europe’s energy dependence on Russia and increase our defence capacity. In this respect, it will be important to see how some of the initiatives discussed at the recent EU leaders’ summit in Versailles take shape over the weeks ahead.
Before 1960, the Beatles was still a struggling high school band. However, through some strange connections, Beatles got invited to play at some night clubs in Hamburg in 1960–1962. Within a year and a half’s time, the Beatles played in these Hamburg clubs for 270 nights. These Hamburg clubs were not the kind of music halls in which proper concerts are conducted. They were more like drinking clubs where lots of people came in and went out constantly as live entertainment on stage was performed. The Beatles had to perform 4, 6 or even 8 hours each night. Because of so many live performances of very long hours, the Beatles had greatly improved their stamina and team work. Moreover, they had to try out different varieties of music and songs in order to satisfy the customers. So, by the time the Beatles made their celebrated US tour in February 1964, they had already done an amazing 1,200 live performances. This is an astonishing and unusual number. In those days and even now, very few rock and roll bands are able to do that many live performances in their entire careers. Again the question that I have is: Would the Beatles be just as good and as talented without Hamburg? There was an enlightening study conducted by Ericsson in the 1990s.

In those days, even university students in the USA would not find it easy to have access to mainframe computers, let alone doing non-stop programming. But Gates had the opportunity and the advantage of having done lots and lots of programming, probably more than 10,000 hours, when he started Microsoft, which subsequently outperformed all other competitors in the field by huge margins. The question that I have is this: Would Bill Gates still be the same Bill Gates that we now know if he did not have the opportunities that were opened to him in these early years of his adolescence that enabled him to jump start on his programming career ahead of so many other equally clever and talented people in the USA? I don’t quite know the answer, but let me turn to another example of great success in the last century in the musical world – the Beatles. Being a person born in the 1950s, it is not surprising that I am very fond of the Beatles. John Lennon, Paul McCartney, George Harrison and Ringo Starr were clearly very, very talented. Ever since they launched their hugely successful tour of the USA in February 1964, the Beatles had for several decades became the centre of the rock and roll world. But is it true that Beatles became so good and so successful simply because they were music geniuses? BIS Review 174/2010  1  Is it that simple? Let’s look closer at the days before they became the idol of the world.
Given the increasing availability of innovative financial products and much improved risk management techniques by commercial banks in Thailand, the Bank of Thailand has gradually relaxed our regulations in this area. At the moment, importers and exporters who wish to hedge this foreign exchange risk for a traderelated transaction can choose from forward contracts, plain-vanilla options or even certain structured products to suit their needs and preferred level of sophistication. My final point concerns the role of the futures market as an insurance mechanism. As mentioned previously, agricultural products tend to exhibit highly volatile prices causing farmers to suffer from this risk of violent price fluctuation. The government has stepped in to provide relief in the form of government price support scheme. At present, the government is running commodity price  2  BIS Review 14/2006  stabilisation schemes in four products namely paddy rice, corn feed and tapioca. These price support schemes provide an insurance for farmers against adverse price movement- in the form of selling put options to the farmers. The schemes have grown to become a substitute for the futures marketeliminating the very incentive for farmers, traders and producers to participate in the futures market. This is particularly the case when the guaranteed buying prices from the government are set at relatively high level compared to market-determined prices. I mentioned before that the average daily turnover in the AFET now is around 400 contracts. However, the majority of the trading is heavily concentrated in the ribbed smoked rubber sheet no.

Those dynamics obviously have a direct impact on financial stability. Financial fragility comes out of excessive leverage and maturity transformation, fueling asset price increases. And, conversely, liquidity shocks and deleveraging are the symptoms and channels behind financial crises. As importantly, and less recognized until recently, those dynamics also have a major impact on the transmission mechanism of monetary policy. The functioning of the credit channel, but also the interest rate channel depend on financial intermediaries being able to fund themselves and arbitrage across different market segments, instruments and maturities. Dysfunctional credit markets were a major reason why Central Banks embarked into exceptional liquidity provision, credit easing and asset purchases. One important point, here, is that the same dynamics affect both financial stability, on the one hand, and monetary transmission channels, on the other. Now, presumably, any macro prudential policy would try and influence the evolution of maturity transformation and leverage. By doing so, however, it would also have a monetary impact. And, conversely, changing the monetary stance, by moving policy rates, also may have an influence on financial stability. The relative strength of those influences is not empirically known. Those of us who would use monetary policy with a financial stability objective implicitly assume that leverage and maturity transformation are very sensitive to interest rates. I am not sure this is true.
These two trends, non financial actors leveraging up and greater risk taking by financial institutions, are indeed global trends. Within the euro area, credit distribution (bonds and loans) to the private sector has remained the most dynamic in France, resulting in a gradual but persistent increase in debt ratios. 2/4  BIS central bankers' speeches  More recently, credit has been getting some traction in other economies so that French developments may be informative of forthcoming developments elsewhere. In all cases, the concern is less about an immediate risk that one regarding the sustainability of the current developments. These are indeed medium-term trends deserving serious attention alongside other medium-term developments such as digitalization or climate change. The former (digitalization) hold very promising prospects in terms of efficiency, inclusiveness and quality of consumer services, etc. It is also a formidable challenge for the incumbents, threatening established positions and questioning business models. Depending on the reactivity of the various stakeholders, (traditional financial institutions, new players, established players in other sectors making a foray into financial services, regulators, etc. ), this challenge can be satisfactorily overcome or leave the whole financial system in a rather precarious situation. The latter (climate change) is a tremendous challenge that will contribute to reshaping the global economy and, more broadly society. This challenge is so significant that it is bound to have consequences for the financial system both as a risk concern and as a business issue.

The only effective means for conveying confidence to agents, who clearly perceive the effects of the crisis, is through the acknowledgement of the actual impact of the crisis and of the challenges posed, together with a credible commitment to tackle resolutely and forcefully the reforms needed. Before discussing specific measures, and given the difficulty of implementing them, we should question whether the Spanish economy might emerge from this crisis without undertaking reforms. The speed with which the Spanish economy is adjusting might lead us to think that the undoubtedly notable capacity of the Spanish private sector would alone suffice to swiftly reduce the imbalances built up over the past 15 years. Certain indicators, such as the spectacular improvement in inflation and the rapid reduction of the external deficit, might support this “comfortable” or “lazy” view that it would be possible to exit the crisis sidestepping painful reforms. Let me tell you what I think. Structural reforms are necessary and pressing, firstly to cut the cost of the adjustment, and secondly so that recovery is not unnecessarily delayed. The real and financial crisis buffeting the world economy has deprived us of some of the attributes, such as readily available external financing and buoyant external demand, which in other circumstances might have helped us temper the intensity and speed of the adjustment of our domestic demand. It is precisely in the absence of such attributes that certain imbalances are being rapidly reabsorbed.
Once you look beneath the apparently benign surface of the economy as a whole in recent years, you find very substantial differences in particular between many internationally-exposed sectors of the economy including particularly many manufacturing businesses - which have recently been having a really tough time, and other businesses largely serving our domestic market which have been doing pretty well. Let me assure you that the MPC is only too well aware of the problem. We receive regular monthly written reports from the Bank's 12 regional agencies all around the country on the state of the economy as seen through the eyes of their 8000 or so business contacts. That includes reports from John Bartlett our Agent here in Birmingham and Chris Brown, our Agent for the East Midlands based  BIS Review 23/2002  3  in Nottingham, both of whom will be known to many of you. And about half the Agencies by rotation attend our monthly pre-MPC meeting in London to brief us face to face. Beyond that each individual MPC member makes regular visits to businesses located all over the country to see and hear for themselves. All of this plays a vital role in informing our interpretation of the bare economic and financial statistics. It's not that we do not know what's happening at the micro-economic level, the question is what can we - what should we - do about it in setting monetary policy?

But, these efforts should help us to avoid repeating the mistakes of the recent past, and to take a more proactive stance toward mitigating potential future vulnerabilities. Of course, we at the Fed are not alone here. Since the recent financial crisis, central banks worldwide have been engaged in a broad rethinking of how better to fulfill their mandates. I also think there is another area we need to work on, an area where very little has been done to date. We need to collectively devise a better international mechanism for facilitating BIS central bankers’ speeches  3  adjustment when the direction of capital flows changes abruptly. The current regime strikes me as inefficient and often ineffective. Holding large cushions of foreign exchange reserves is expensive, drawing down those reserves is often unattractive because of the potential adverse signal that this sends, and EMEs are loath to turn to the International Monetary Fund for resources to cushion the adjustment process. It seems to me that we could design a better global solution of collective insurance – access to liquid resources in times of stress that were not stigmatized and that could and would be used to facilitate adjustment. This could help reduce market volatility and dampen the size of foreign exchange and other adjustments. This is a topic, in my opinion, that deserves greater attention from central bankers around the world. Let me close with a final thought. The largest problems that countries create for others often emanate from getting policy wrong domestically.
To sum up, the economic analysis indicates that we may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on. A cross-check with the signals from the monetary analysis confirms this picture. As regards fiscal policies, the Governing Council welcomes the European Commission’s assessment of the 2014 draft budgetary plans which were submitted in October for the first time under the “two-pack” regulations. This new surveillance exercise needs to be fully effective. In order to put high public debt ratios on a downward path, governments should not unravel their efforts to reduce deficits and sustain fiscal adjustment over the medium term. In  2  BIS central bankers’ speeches  particular, consolidation measures should be growth-friendly and have a medium-term perspective, so as both to improve public services and minimise the distortionary effects of taxation. At the same time, there is a need to push ahead with product and labour market reforms, in order to improve competitiveness, raise potential growth, generate employment opportunities and foster the adaptability of our economies. We are now at your disposal for questions. BIS central bankers’ speeches  3

As long as the provider of the annuity, typically an insurance company, knows how long we will live on average, then additional payments to the long-lived will be exactly offset by fewer payments to the short-lived. By pooling risks, annuity providers can offer insurance against longevity. But to offer a single annuity is risky. In Sense and Sensibility, Fanny Dashwood explains to her husband the drawbacks of providing an annuity to his family: “if you observe, people always live forever when there is any annuity to be paid them. An annuity is a very serious business; it comes over and over every year, and there is no getting rid of it”.18 Only a small fraction of savings are invested in annuities.19 One explanation for this is that annuity providers find it difficult to distinguish the healthy from the sick ex ante, the former purchasing more annuities than the latter, leading insurance companies to offer annuities on less attractive terms thus discouraging their purchase.20 This “adverse selection” is important - it is approximately 20% more expensive to buy annuities as an individual than in a group scheme.21 Collective risks raise additional problems. Longevity risk to a particular cohort can be shared only across generations. Those generations who are alive today can pool risks through financial markets.
Central banks must also avoid misperception and for that reason, they should not rely on a limited set of indicators but should use a comprehensive and rigorous analysis aimed at picturing the economy as a complex and permanently evolving system. Central banks also have the difficult task of identifying shocks hitting the economy and of addressing them appropriately by assessing their potential implications in terms of risks to price stability. Model analysis, monetary analysis, model -based forecasts are additional useful tools employed in this context. This is precisely the approach taken by the ECB, which developed its two-pillar-strategy in order to help to sort through the wealth of potentially conflicting statistics. Conclusion Let me now briefly conclude my remarks by asking the question: what information do we really get from asset prices, and particularly from inflation - indexed securities? Financial markets do indeed play a critical role in the process of setting monetary policy. In effect, the influence of monetary policy on the real economy and ultimately on prices is largely transmitted through asset prices. As pointed out by Blinder, the economic activity is not directly affected by the changes in the key policy rates, but rather by long-term interest rates and, where relevant, through wealth effects. In short, monetary policy affects the economy through its interaction with long-term expectations, which in turns affect asset prices and then economic activity and inflation. But central banks also rely on financial markets for information to help explain their monetary policy decisions.

Second, inflation expectations may be used by policy makers to gain information about the setting of short-term interest rates, whereas changes in the nominal yield curve, on their own are of no use. An increase in long-term nominal interest rates may be driven by a rise in the long-term expected inflation rate or a rise in the inflation risk premium, but it may also reflect an increase in long-term real interest rates, driven by some real factors. The two first movements could justify a change in the monetary policy stance, once the nature of the underlying shock and its likely duration have been clearly identified, but such a change may be inappropriate in the last case. Third, information on long-term inflation expectations can provide monetary authorities with a measure of the credibility of their commitment to price stability. The existence of a market for inflation-indexed securities may provide central banks with very useful information, since it may then enable them to identify whether changes in nominal yields mainly reflect changes in the expected long-term inflation rate or rather whether they are due to changes in real yields.
Page 5 of 14  1.2 The cyclical causes The primary mission of central banks, and of the European Central Bank (ECB) in particular, is to ensure price stability, notably by “smoothing” fluctuations in the economic cycle. They do this by setting the level of shortterm interest rates. In 1998, the ECB established a quantitative definition of price stability that it went on to clarify in 2003: to maintain inflation rates below, but close to, 2% over the medium term. More recently, other central banks have adopted this 2% inflation target, for example the US Fed in 2012 or the Bank of Japan in 2013. Our monetary policy has pursued this inflation target since 1999, with tangible results: inflation has remained close to target at an average of 1.7%. Page 6 of 14 Source: Eurostat  In the past decade, however, euro area inflation has been too low: 1.3% on average between 2011 and 2019, and 1.3% today [Core inflationv is also at 1.3%]. This weakness in inflation, which can be observed in the majority of advanced economies, has reignited the debate over the 2% target. Some, such as one of my great predecessors, Jacques de Larosière, say we should be content with the current 1%. Others, on the contrary, such as Olivier Blanchard, former chief economist at the IMF, are arguing for a higher target of up to 4%, which would leave more room to lower interest rates at the bottom of the cycle. It is tempting simply to ignore these arguments.

But the specific nature of France’s situation makes it impossible to single them out as the central cause: rates are low across the euro area, and yet, on average, the levels of debt carried by households, firms and state governments have declined as a share of GDP, whereas in France they have increased. Page 11 of 14  This is more a justification for greater vigilance in our country. I shall turn now to two current limits of monetary policy. 2.2  Two limits requiring vigilance  Financial stability The first area where vigilance is required is regarding the consequences of low rates for financial stability. It is important first to stress that the financial sector’s capacity to absorb shocks has been substantially reinforced since the great 2008-09 crisis: balance sheets have been cleaned up and bank solvency and liquidity have been improved thanks to the European and international regulations known as Basel III, and to a considerable reduction in the weight of non-performing loans. What is more, the effects of monetary policy include some positive aspectsxi that are all too often overlooked by the banks: lower financing costs; a reduced cost of risk due to the improvement in borrower solvency. That said, while accommodative monetary policy is a benefit for economic agents, prolonging it puts pressure on the profitability of financial players – both banks and insurers alike.