samchain/econo-pairs-v1 huggingface dataset:
BIS Review 64/2002  1  Beyond the very short term, we consider that both the euro exchange rate, which has strengthened since early this year, and the overall economic environment are still contributing towards reducing inflationary pressure. Moreover, there should also be a further unwinding of the indirect effects of previous increases in oil prices and other factors that have added to the stickiness of the annual rate of HICP inflation excluding unprocessed food and energy prices. However, for inflation rates to fall below 2% in the course of 2003 and to remain in line with price stability thereafter, as indicated by recent forecasts, it is crucial that oil prices do not increase sharply again and that the upward trend in labour cost indicators observed in recent years does not continue. With regard to the latter, there seems to be notable inertia, despite the subdued economic expansion; therefore, vigilance is warranted. Regarding fiscal policies in the euro area, may I expressly refer you to the Governing Council's statement of Thursday, 24 October on the Stability and Growth Pact. There is a strong consensus within the Governing Council that the principle of budgetary discipline enshrined in the Treaty and the Stability and Growth Pact are indispensable for Economic and Monetary Union and that the Stability and Growth Pact has been successful in promoting sound public finances and fiscal convergence, as well as in supporting the return to price stability. Moreover, the Pact is in the interest of the Member States.

Loans to the private sector have stabilised at growth rates somewhat above 5%, a rate of expansion which, in real terms, is broadly in line with the long-term average. Considering all the evidence relating to the first pillar, from a medium-term perspective, more liquidity is available than would be needed to finance sustainable, non-inflationary growth. However, given the current economic environment, we do not see the risk of this translating into inflationary pressure in the near future. Concerning the second pillar, recent short-term conjunctural indicators and survey data suggest that real GDP in the euro area has continued to grow only moderately in the third quarter of this year. This is in contrast to earlier expectations that a more pronounced upswing would occur in the course of this year. Obviously, the hesitant pace of economic expansion and current, lacklustre confidence reflect the significant degree of uncertainty that has been building up over recent months. This uncertainty is associated with geopolitical tensions, the evolution of oil prices and developments in stock markets. However, for the time being, the main scenario for the euro area remains that economic growth is expected to return to rates close to potential in the course of 2003. In fact, this expectation is consistent with all forecasts published by international organisations. Private forecasters, on the whole, also seem to share the same view. Moreover, financial markets have shown signs of stabilisation in recent weeks following a period of considerable turbulence.
Number of work permits in the UK, Ireland and Sweden issued to citizens of new Member States following the EU accession In thousands UK *  Ireland**  Sweden***  Total  In % of workforce †  Lithuania  44.72  26.37  0.37  71.46  4.4  Latvia  23.03  12.94  0.16  36.14  3.2  Estonia  4.68  3.39  0.36  8.43  1.3  Poland  204.90  70.14  2.16  277.20  1.6  Czech Republic  20.01  6.39  0.07  26.47  0.5  Hungary  10.35  3.83  0.20  14.37  0.3  Slovakia  36.36  10.93  0.09  47.38  1.8  *Source: Accession Monitoring Reports, http://www.ind.homeoffice.gov.uk. The data include the period between May 2004 and December 2005. NBP calculations. **Source: Skills needs in the Irish economy: The role of migration, A submission by the Expert Group on Future Skills Needs and Forfás to the Minister for Enterprise, Trade & Employment, http://www.skillsireland.ie. The data include the period between May 2004 and August 2005. ***Source: Migracje specjalistów wysokiej klasy w kontekście członkostwa Polski w Unii Europejskiej. Centre for Migration Research, Warsaw University. The data include the period between May 2004 and December 2004. †Workforce – people of 15 and more years of age in Q1, 2004. 10  HSBC “The Great Migration. How China’s 200 million new workers will change the economy forever”, HSBC Global Research, October 2005.

15  In 1980 bank deposits accounted for 45% of total financial assets, currently their share dropped to 30% (McKinsey Global Institute 2005 – ibidem). 16  It is called the Feldstein-Horioka puzzle, after the two economists, who were the first to empirically prove its existence (Feldstein, 2005). 17  Feldstein M. Monetary Policy in a Changing International Environment: The Role of Capital Flows, NBER Working Paper 11856, 2005. 6  BIS Review 32/2006  growth of cross-border capital flows. What does that mean to the monetary policy? If domestic and foreign financial assets are treated more and more as perfect substitutes, domestic interest rates, especially mid- an long-term ones, are determined on the global market, and thus the influence of particular central banks on their level is weakened. This phenomenon is already observed in the USA. Although the key interest rate of the central bank has been raised from 1.00% in 2004 to 4.75% at present (i.e. by 3.75 percentage points), long-term interest rates, which are more important from the aggregate demand perspective, have remained roughly unchanged 18 . As a result, the effect of tightening the monetary policy on the aggregate demand has been significantly contained due to lack of response from long-term interest rates. In the world of global financial markets nobody seems to be surprised by the fact that during the session of the Federal Open Market Committee (FOMC 19 ) of the American Federal Reserve, the eyes of the entire financial market are fixed on its Chairman. Why is that?
4  non-renumerated reserve requirement of 40% with a holding period of a year on capital inflows into the bond market and high-yielding deposits. It worked, and monetary transmission through the interest rate channel was restored. As a result, we also avoided the build-up of significant carry trade positions with the associated risk to financial stability. We see such instruments as temporary and only to be used as a third line of defence. Furthermore, it remains an open question whether they will be seen to be more in the nature of macroprudential tools or as infringements on our treaty obligations to maintain free capital movements. We are hoping that everybody has learned the lessons of the crisis where large and volatile capital flows played a key role.3 In concluding, let me come back to the IMFS and ask what I have said about the plight of SOFIEs means in terms of desirable reforms. First, we need to continue to adapt IMF surveillance and facilities and other parts of the GFSN to modern realities. Second, we need to further reduce financial regulatory flaws and gaps at the regional and global level regarding capital flows and cross-border banking. Third, we need to try to find ways to make central bank swaps a more transparent and reliable part of the GFSN. Finally, international organisations and treaties need to accommodate but monitor SOFIEs’ use of macroprudential and capital flow management tools. With time, we might develop a new consensus on the rules of the game.

The gap between savings and investment is therefore huge: the current account surplus reached EUR 350 billion on a yearly basis in August 2016, which is more than 3% of GDP. This “investment crunch” – rather than the “saving glut” – is holding back our growth. It is true that part of the decline in total investment since the crisis has come from a drop in real estate investment: it was booming before the crisis, especially in countries experiencing real estate bubbles such as Spain. But what matters the most for our long term growth is business investment – and more precisely “productive investment” (slide 6): this includes investment in research and development and industrial machinery, as opposed to investment in construction which in itself does not spur innovation. One issue for concern is that the productive investment rate has long remained below its pre-crisis level in the euro area. What is more, it has been weaker in France and Spain than in the euro area as a whole, although it has been recovering in recent years especially in Spain. These developments have translated into a striking change in businesses’ behaviour (slide 7): since mid-2009, euro area non-financial corporations have turned from net borrowers into net lenders, thereby fuelling the euro area current account surplus. Page 6 sur 8 2. To address the “investment crunch”, we need a comprehensive therapy, both economic and financial. On the economic side, business investment depends indeed on two levers (slide 8). The first one is expected demand.
Colleagues, Zambia’s external sector has also registered significant improvements over the last ten years, with notable surpluses recorded over the last five years. This was largely on account of higher growth in export earnings relative to import bills. Total merchandise export earnings have more than doubled over the last five years to 10.4 billion US Dollars in 2013 from 4.5 billion US Dollars in 2008. The increase was driven by a rise in earnings from both metal and non-traditional exports. Metal exports rose by 76.1% to 7.0 billion US Dollars in 2013 from 4.0 billion US Dollars in 2008 due to both improved prices and an increase in export volumes. Non-traditional export earnings posted a stronger growth of 283.6 % to 3.4 billion US Dollars from 900 million US Dollars over the same period. However, the current account surplus narrowed in 2013 as imports grew faster than exports. This is a normal trend in a growing economy as most of the imports are machinery and intermediate goods such as industrial boilers and equipment, petroleum products, chemicals and motor vehicles that are expected to enhance productivity and ultimately increase production. In the foreign exchange market, the Kwacha has been relatively stable in the last few years. However in 2013, the Kwacha was characterised by a depreciating trend against most major  2  BIS central bankers’ speeches  trade partner currencies, except the rand. The Kwacha depreciated against the US Dollar by 4.9% to an annual average of $ from $ in 2012.

This growth was mainly driven by expansions in the transport, storage and communications;  BIS central bankers’ speeches  1  construction; community, social and personal services; financial institutions and insurance as well as manufacturing sectors. In line with the expansion in real GDP, per capita GDP has increased from 332 US Dollars in 2000, to 655 US Dollars in 2005 and 1,784 US Dollars in 2013. We are, however, alive to the fact that more growth is required in order to have a lasting dent on high poverty levels and even more important, there is need to do more to make growth more inclusive and equitably distributed among the citizens of our country. Distinguished Participants, to ensure sustainable economic growth, the Government has been pursuing appropriate macro-economic policies. To this effect, inflation has declined from the double digits of the early 2000s to single digit levels as recorded in recent years. Annual inflation slowed down to 7.1% in December 2013 from 7.3 in December 2012, although it was 1.1 percentage points above the end-year target of 6%. This outturn reflected higher non-food inflation which was moderated by lower food inflation. Higher non-food inflation was largely due to higher fuel prices, coupled with pass-through effects of the depreciation of the Kwacha against the US dollar. During the first four months of 2014 inflation rose to 7.3%, 7.6%, 7.7%, and 7.8% in January, February, March, and April, respectively.
The main idea I would like to convey in these introductory remarks is that if during the crisis economic policies have concentrated – with some justification – on measures that are intended to have a short-term impact, the time has come to shift the focus onto reforms which are designed to have only medium and long-term effects but that, through a change in expectations can provide a shot of confidence, a key ingredient for resuming a sustainable growth path. The global economy is certainly recovering from its deepest downturn since World War II. We have witnessed a period of crisis in which economic policies have reacted in an unprecedented manner, focusing on countering in the short run the highly adverse economic and financial situation. Major central banks reacted decisively by providing abundant liquidity to financial systems and substantially cutting their key interest rates. These standard monetary policy measures were later complemented by other, non-conventional measures, to avert the threat of a drastic loss of liquidity in the financial system as a whole and support the flow of credit to firms and households. Fiscal authorities, in turn, put in place a number of measures aimed, first, at supporting financial systems and, further, at stimulating demand. And there is broad consensus that this policy reaction was warranted and has played a crucial role in halting the risk of collapse and containing the crisis.

Also this broad comprehensive reform approach can help create the consensus that is needed for reform, as different actors perceive more clearly the benefits of a comprehensive reform package, and not only the costs to them of specific reforms. Some good examples of the benefits of this comprehensive approach are Denmark or the Netherlands, countries that adopted a mix of labour market, public finance and product market reforms that complemented and reinforced one another. I do not want to take up any more of your time with these opening remarks. Let me simply thank you once again for sharing your thoughts with us. Here’s wishing every success for the conference. Now Professor Blanchard will complete these introductory remarks. Olivier, the floor is yours. 4  BIS Review 65/2010
Figure 4: Ratio of Capital Funds to Total Assets of LCBs 8.0  Per Cent  7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0  2000  2001  2002  2003  2004  2005  Sep06  per cent  Figure 5: Non Performing Advances to Total Advances of LCBs 18 16 14 12 10 8 6 4 2 0 2001  2002  2003  2004  2005 Sep-06  It would also be noted in the year 2006, several important measures were taken to strengthen and improve the efficiency of the financial sector, improve risk management, enhance access to finance, strengthen the payment and settlement system as well as supervision and regulation. Banks were required to include market risk in the computation of capital adequacy to ensure that they are adequately capitalised to meet any adverse fluctuations in market prices and are not vulnerable to any unanticipated shocks. Prudential norms for classification and valuation of bank investment portfolios were further strengthened. To improve the safety and efficiency in the payments and settlements systems, the Central Bank also drafted a payment system policy in consultation with the National Payment Council to declare a public policy regarding the regulatory framework. As is well known, the Central Bank manages the Employees’ Provident Fund (EPF). It does so by receiving member contributions, maintaining member accounts, investing funds and paying benefits to members. The total assets of the EPF grew by 13 per cent to Rs.439 billion during the 12 months ending June 2006.

Domestic private savings in 2006 has now been projected to increase to 19.4 as a percentage of GDP. National savings are also projected to increase, resulting from increased savings by non-resident Sri Lankans as evidenced by the high growth in migrant worker remittances. The Investment to GDP ratio is also expected to improve from 26.5 per cent in 2005 to 29.0 per cent in 2006, and Private sector investment, which accounts for about 87 per cent of total investment, is estimated to increase by 31.4 per cent. Public sector investment too is projected to rise by 7.5 per cent as a result of growing construction activity in highways, roads, infrastructure facilities, community development projects, and tsunami related reconstruction and rehabilitation projects. The performance in the External sector improved with the continued expansion in international trade and growing global demand. During the first ten months of 2006, exports grew by 6.5 per cent and Imports by 15.8 per cent with a higher growth in intermediate and investment goods. The outlay for petroleum imports increased by 29.6 per cent during this period due to the soaring oil prices. For the year as a whole, export growth is projected at 7 per cent and import growth at 15.4 per cent. An aspect of the economy which caused some concern in the year was that the trade deficit widened to US dollars 2,955 million. As the result, the Current Account also recorded a deficit of US dollars 1,038 million in the first nine months of 2006.
From the very beginning, we have been aware of the fact that keeping our non-standard measures in place for longer than necessary would entail the danger of creating harmful distortions. Therefore, we designed the measures with exit considerations in mind. In view of the improvements in financial market conditions seen since last spring, we have started to gradually phase out some of them. More specifically, we have stopped providing liquidity in foreign currencies, and we have stopped operations involving maturities longer than three months. Also, we have decided to return to variable rate tenders in the regular three-month operations towards the end of this month. However, the Eurosystem will continue to provide liquidity support to the euro area banking system at very favourable conditions in its shorter-term refinancing operations (that mature after one week and after approximately one month). We have decided to do this for as long as necessary and at least until mid-October this year. The speed and path of the subsequent gradual phasing-out of the non-standard measures will depend on economic and financial market developments. The remaining measures are not many. They include, inter alia, the tender procedures to be applied in the main refinancing operations and the operations with a duration of one maintenance period, approximately one month (which could be returned to variable rate tenders). All our actions will remain fully in line with the objective of maintaining price stability over the medium term. We do not know today what normality will look like after the crisis.

Likewise, we cannot be specific today about the design of the “final” post-crisis operational framework. Before  8  BIS Review 51/2010  deciding on this, we will need to consider thoroughly the lessons to be learnt from the crisis. However, the operational framework that prevailed prior to the turmoil seems to provide a good benchmark. It served us well prior to the crisis, and could be adapted quickly as circumstances worsened. Concluding remarks Let me conclude. There is no doubt that the crisis will leave us a heritage of severe macroeconomic imbalances. Dealing with them will represent one of the most daunting challenges for policymakers in modern history. Against this backdrop, let me emphasise that the Governing Council will continue to deliver on its mandate, which is to maintain price stability over the medium term. All our decisions regarding an exit from supportive measures need to be seen within this context. As regards fiscal policies, it is essential to prevent public finances from running out of control. Clearly, this will require a very ambitious fiscal consolidation effort. In particular, as regards the consolidation strategy, and given that the tax burden is already high in many countries, the fiscal adjustment will have to be primarily expenditure-based. Finally, let me stress that any call to reduce the real value of public debt through higher inflation will be firmly opposed by the ECB. A low and stable level of inflation is a prerequisite for confidence, stability and sustainable growth. Thank you.
But in the rest of the sample, they don’t do much: the compositional effects have been predominantly within, not across, sectors. During 2014, for example, it’s the fact that new jobs went to people with below-average qualifications and experience, and in lower-paid occupations, that depressed average pay growth7. Third, as I emphasised in the introduction, this cyclical pattern is entirely typical. The fact that new hires have low job tenure – and that the average experience of the workforce therefore declines when unemployment falls rapidly – is hardly surprising. That average skill levels should be counter-cyclical is, perhaps, less obvious. But it is a widely and long observed empirical fact: it’s true in all countries that employment rates are lower and more cyclical among the young and unskilled. Why should low skilled employment be more cyclical? Economists have come up with a number of possible explanations. One likely factor is that skilled jobs tend to be more specialised. That means they’re also more likely to be retained, or “hoarded”, in a downturn: the costlier it is to replace someone the more reluctant will be the employer to let him or her go. Another possibility is that low-skilled workers are more easily substituted by new capital and new technologies. So when firms are relatively thinly capitalised, early on in an economic expansion, they tend to hire more unskilled people. Later on, as the recovery matures and investment in new capacity starts to take hold, it’s the demand for skilled employment that starts to grow faster.

Chart 7, summarising the results, is a version of a graph we published in the last two Inflation Reports. Note that, over time, the effects have tended to be positive. The average age and experience of the workforce has grown; more people have gone into higher education and higher-paid occupations. But on top of that underlying trend, we’ve seen sharp movements, in both directions, during the recent cycle. Both the drop in job creation during the Great Recession, and the corresponding pick-up during the recovery, were skewed towards the less skilled, less well paid end of the jobs market. Chart 8, which plots the differences in job creation across three classes of occupational characteristics, depicts one aspect of that pattern5. You can see similar differences in rates of job creation between young and old, less and more educated. And as I outlined in the introduction, the effect of these swings was to add materially to the growth of average earnings during the downturn and to subtract from it in 2013 and 2014. Unskilled employment generally more cyclical Before asking why this has happened let me make a few points about the estimates. First, there are some approximations involved. One involves the mix of surveys: we’re estimating the impact of compositional changes on LFS pay data and assuming the effect simply carries over to the AWE. That’s the most reasonable assumption, but it’s an assumption nonetheless.