samchain/econo-pairs-v1 huggingface dataset:
It is the latter which is the correct measure of output and it differs from the former by an appropriate allowance for depreciation of capital  2  BIS Review 58/2001  goods. The proper measure of output is net domestic product, NDP. In normal circumstances, the growth rates of GDP and NDP are identical. But the two can differ when the average depreciation rate of the capital stock is changing, and that is exactly what has been happening recently. There has been a shift toward greater investment in short-lived assets, such as IT and computer software, and as a result the average depreciation rate has risen. Part of the additional gross output is simply replacing the higher proportion of capital that wears out each year. It makes no sense to include the higher depreciation as part of increased output and hence higher productivity. A change in technology that raises output today at the expense of output tomorrow is not an improvement in productivity. Using estimates of growth rates of GDP will lead to an overestimate of the rise in productivity growth during the transition to higher depreciation rates. The rise in average depreciation rates in recent years suggests that the magnitude of this overestimation could be non-negligible, although more research is needed. Moreover, as John Kay has pointed out, the measurement problem, and the overestimation of output growth, is even more acute when the price of capital goods is falling relative to that of final consumption goods.

Net external demand, exports less imports, actually made a negative contribution to total economic growth in each of the past five years. This is the first time that the external contribution to growth has been negative for a period of five consecutive years since the 1870s. And that negative contribution is likely to continue for the foreseeable future. BIS Review 58/2001  1  Imbalances on this scale are unsustainable, although it is far from obvious for how long they can continue. At some point, the weakening balance sheet positions of the private sector will lead to a slowing of consumption and investment as households and firms, respectively, reduce spending to lower the ratio of debt to prospective income. Household debt to income and corporate debt to profit ratios are at historically high levels. Moreover, within the corporate sector the debt levels of the most highly indebted companies – those in the top decile of the distribution of debt to profits ratios – are even higher than in the early 1980s and early 1990s. That holds true even when the telecoms sector is excluded. Spending might, therefore, be expected to decelerate in response to these balance sheet positions. But, for the time being, final domestic demand continues to grow at above trend rates, exacerbating the imbalances within the economy and adding to the risk of a large adjustment at some point in the future.
7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  In that regard, the growth of open-ended investment funds, many offering investors the chance to redeem their share in the fund at a day’s notice, is notable. They have more than doubled in size since the crisis. As they’ve grown, these funds have invested increasingly in illiquid assets. Open-ended mainstream equity funds have been joined by corporate bond, leveraged loan, commercial property and emerging market debt funds. That growth has been an important source of finance for our economy. For example, these funds hold at least a quarter of the additional corporate bonds issued by UK businesses since 2008. So their stability has economic significance. It has the potential to become a systemic issue. While there is a role for these funds in our system, they do have a structural flaw when they start holding less liquid and truly illiquid assets. Despite offering investors the chance to redeem their share at a day’s notice, they typically offer a price for the share based on the quoted market prices of the funds’ assets. But when you hold anything other than the most liquid assets, it can be difficult to realise those quoted prices in one day, especially if a fund is forced to sell in scale. It can take weeks or sometimes months. This isn’t a problem when some investors are buying in as others are selling out. None of a fund’s assets actually need to be sold to pay redeeming investors.

Bank estimates based on the impact of historical financial crises in a sample of advanced economies, reported in Brooke et al (2015), suggest that the average cost of a financial crisis has been 73% of GDP, which translates to a cost of roughly £ per capita if a financial crisis had taken place in 2016. 3 The Bank of England’s Financial Policy Committee identifies, monitors and takes action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The FPC is not authorised to take action that is “likely to have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the UK economy in the medium or long term”. 4 See Figure 1 of my article ‘An evolving financial system: Don’t leave it too late, simulate’. 5 Peak amount of cash support in the form of loans and purchase of share capital. Source: National Audit Office. 2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Losses that would have wiped out the entire British banking system in 2007 can now be absorbed in buffers of capital.
Jean-Pierre Danthine: Are central banks doing too much? Translation of a speech given in French by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Foire du Valais, Martigny, 9 October 2014. *  *  *  The speaker thanks Fabian Gunzinger for his valuable support in drafting this speech. He is also indebted to Irma Cruz, Till Ebner, Peter Kuster, Claudia Strub and the SNB Language Services for their assistance. Introduction In recent years, central banks have been active in their attempts to mitigate the financial crisis and its aftermath, and they have also assumed a more prominent role in the regulatory efforts to prevent similar crises in the future. This has led many commentators to ask the question I raised in the title of this speech: are central banks doing too much? The short answer to the question – you may not be surprised – is “no”. The measures which central banks have taken since the beginning of the financial crisis in 2007 are a direct consequence of the severity of the crisis itself. First, conventional central bank measures – cutting interest rates, providing liquidity and acting as lender of last resort – were required to prevent the collapse of the financial system. Second, the use of various unconventional measures was a responsible step to support weak recoveries, given the shortage of available alternatives.

By and large most scholars seem to agree that the resolution of the crisis in Norway was fairly successful. But even if it was, right there and then, there is no guarantee that the same recipe will be successful in future or in other countries. In recognition of this and to avoid moral hazard, the law establishing the Government Bank Insurance Fund has now been repealed and the Fund has ceased its operations. Even if government capital injections in the large problem banks were the right resolution method in the early 1990s, it is far from evident that such a rescue operation would be the right method should a large bank fail in the future. However, I think it is possible to identify some principles that should be adhered to in order to increase the chances of success. The focus must be on saving the financial system, not the individual bank. With regard to the way failed banks are handled, the division of responsibilities between various parts of government must be clear, as it was ten years ago. As then, owners should be the first in line to shoulder losses. Similarly, the board and top management responsible for the failure of a bank should not be allowed to continue. Hopefully we have all, bankers and authorities alike, learnt from the crisis. At the central bank, we have strengthened our surveillance of the soundness of our financial system (macro-prudential supervision).
Thus, by working to ensure price stability as well as maintenance of a safe, sound and efficient financial sector, the Bank is contributing to the achievement of sustainable economic growth and, ultimately, poverty reduction. In a nutshell, following the amendment of the Bank of Zambia Act in 1996, the Bank’s main responsibilities comprise price and financial system stability. The Bank ensures financial system stability by licensing, supervising and regulating the activities of banks and non-bank financial institutions so as to promote the safe, sound and efficient operations and development of the financial system. BIS Review 74/2004  1  Ladies and Gentlemen, I trust that, as members of UNZABECA, you have actively participated in these series of lectures and expanded your knowledge of the functions of the Bank of Zambia. On our part as Bank of Zambia, we strongly encourage investment in education, which has been demonstrated by the sponsorship of these Lectures. In this regard, I wish to take this opportunity to call upon other institutions to support our university by either sponsoring a series of lectures, like the Bank of Zambia has done, or rendering any financial assistance. As many of you may be aware, most of the companies in Zambia have benefited, in one way or the other, from the services offered by our universities. As for the Bank of Zambia, most of its management members of staff, including myself, are graduates of this university and were members of UNZABECA.

Through these Lecture Series, which have successfully ended today, it has been highlighted that the central bank, like the rest of the economy, adapts to changes in the market environment. In the case of the Bank of Zambia, prior to 1991, the Bank had numerous roles, including the promotion of economic growth through the provision of credit to critical sectors such as agriculture, manufacturing, mining, etc, as well as issuance of export guarantees to exporters. As expected, the multiplicity of functions led to conflict of interest. For instance, on one hand, the Bank was expected to control the growth of money supply while, on the other hand, it was required to inject money into the system through the provision of credit to the selected sectors. The introduction of economic reforms by the Government beginning the end of 1991 therefore brought about enormous challenges for the Bank of Zambia. To meet the new challenges, the Bank’s operations needed to be more focused. In this respect, the Bank of Zambia Act was amended in 1996 to reflect the changed nature of the operating environment. By amending the Act, the Bank’s primary role was solely “to formulate and implement monetary and supervisory policies that will ensure the maintenance of price and financial system stability”. This was deliberate, as experience world-over has shown that you can only achieve sustained and high economic growth in an economic environment characterised by low and stable inflation.
In practice this often means that we allow the time for bringing inflation up or down to the target to vary depending on the prospects for economic activity. According to our monetary policy strategy, our policy is normally aimed at attaining the inflation target within two years. The calculation we made in July indicated that it would probably have required a slightly higher interest rate path than that described in the Report to bring inflation down to 2 per cent in two years. This would have brought down growth even lower next year. Given that inflation was deviating so far from target and taking into account the uncertainty in the financial markets, it would have been better, in my opinion, to aim at bringing down inflation to around 2 per cent in three years. I do not believe that the decision in July can be regarded as any severe tightening of monetary policy. The interest rate is still relatively low. The nominal interest rate prior to the decision at the beginning of July was at a long-term average of 4.25 per cent. But the real interest rate was still lower than an historical average. In July the real interest rate was around 1.5 per cent, but it will rise during the forecast period to just over 2.5 per cent at most. The interest rate path we described in July entailed a change from a relatively neutral to a slightly contractionary monetary policy.

Source: Statistics Sweden  14  BIS Review 100/2008  The policy rate in Sweden Per cent 5  5  4  4  3  3  2  2  1  1  0  0 00  01  02  03  04  05  06  07  08  09  10  11  Note. Broken line represents the Riksbank’s forecast in the M PR 2008:2. Source: The Riksbank  GDP growth in Sweden Quarterly change in per cent, seasonally-adjusted data 2,0  2,0  1,5  1,5  1,0  1,0  0,5  0,5  0,0  0,0  -0,5  -0,5 00  01  02  03  04  05  06  07  08  Sources: Statistics Sweden and the Riksbank  BIS Review 100/2008  15  CPI and CPIF Annual percentage change 5  5 CPI 4  4  CPIF  3  3  2  2  1  1  0  0  -1  -1 -2  -2 95  96  97  98  99  00  01  02  03  04  05  06  07  08  Note. The CPIF is the CPI with a fixed interest rate. Sources: Statistics Sweden and the Riksbank  Summary The picture presented in July remains largely unchanged, with lower growth and high inflation.
The outlook for the Spanish economy over the next few years According to the latest economic projections published by the Banco de España, the upswing is expected to continue until 2019, although activity will tend to slow on account of, among other factors, the less expansionary fiscal policy stance and steady or rising prices for oil and other commodities, which are expected, in any event, to be higher than over the last two years. With regard to the composition of spending, the less expansionary fiscal policy stance and the squeeze on the income of resident agents, resulting from the rise in inflation associated with the increase in energy prices since early 2016, will somewhat reduce the growth of private domestic demand. Net external demand will continue to make a small positive contribution, against a background in which exports are expected to remain dynamic while imports remain relatively weak. The risks surrounding the central scenario The favourable outlook for economic activity I have described is subject to risks originating essentially in the external environment. First, although there has been an improvement in the outlook for world activity and trade, it has been accompanied by an increase in global uncertainty stemming from the greater strength of restrictive positions on trade, migratory movements and international policy coordination, in the area of financial regulation, for example. Second, we should not forget that, despite the significant progress made in deleveraging in recent years, our level of debt is still high.

In 2013 a joint venture for production of banknotes was set up by the BNB Printing Works and one of the world’s leading banknote printers François-Charles Oberthur Group, France, and thus Bulgaria became an important player in the banknote industry. It is interesting to note that over its 137-year history the BNB has organised the production, issue and circulation of more than 500 types of coins, including commemorative coins and medals produced by the Bulgarian Mint in Sofia. You know that a few months ago, on 7 December, the new 2 leva coin came into circulation. The design of that coin enjoys enormous public approval. But let’s come back to our exhibition. Along with the coins struck after Bulgaria’s liberation until now, the visitors will be able to catch a glimpse of the history of money on the Bulgarian lands going back centuries. I am convinced that the displayed items can tell a lot about the  BIS central bankers’ speeches  1  long history and background of the economic and political life on the territory of today’s Bulgaria. I wish much success to this exhibition. I hope many citizens and guests of Burgas will come to see it, to learn more about the money used on the Bulgarian lands, and to feel, as we do today, deep respect for the history and accomplishments of our ancestors. 2  BIS central bankers’ speeches
BIS Review 164/2009  3  dollarization of the Antillean economy, as they thought it sensible to first investigate the situation of similar countries with an experience in dollarization. To my knowledge, no followup has been given to this study. The discussion was again brought up in 2005 when it became clear that Curaçao and St. Maarten would become separate entities within the Kingdom, while the BES-islands (Bonaire, Saba and Statia) elected to become an integral part of the Netherlands. De Nederlandsche Bank (conditionally) advised to form a monetary union between the various islands instead of dollarizing the economy. This was in full conformity with the recommendation made in 2004 by the working group on governmental and financial relations headed by Mr. Jesurun). 2 De Nederlandsche Bank also mentioned that a credible and independent central bank is important when forming a monetary union and that the BNA has proved to be well-equipped for this task. 3 7. Concluding remarks  In view of the forthcoming changes in the Kingdom’s Statutes, Curaçao and St. Maarten will have to decide on a very short term what to do with regard to their legal tender. Although these islands are deemed too small to justify the costs associated with maintaining a local currency, our experience in Aruba, which entails the existence of a local currency linked to the US dollar and a credible central bank, gives us strong arguments to continue with our dollar-linked florin.

I will now briefly elaborate on the pros and cons of dollarization on a macro-economic level, thus not the operational implications. Whether an effect of dollarizing the economy is considered a positive or a negative, it could greatly differ between its advocates and its opponents. I will now briefly refer to some effects of dollarization: 1. Dollarization could lower transaction costs, especially when most payments to nonresidents are in US dollars. 2. Depending on the capital restrictions in place and the depth of the domestic banking sector, it could lead to reduced interest rates, thereby making it less costly to borrow. This could also be the case when acquiring an international loan, as there will be no exchange devaluation premiums on rates charged to local companies and the government. 3. Because of the elimination of exchange rate risk, dollarization could be beneficial to international trade and foreign investment. 4. The import of the monetary policy of the U.S., being the issuing country of the adopted currency, is unavoidable. This means that local policymakers are no longer in the position to use the exchange rate to absorb external shocks or to finance budget deficits by printing money. 5. Some of the tasks of the central bank, especially the function of lender of last resort, which is the credit line for local banks when experiencing financial stress, will disappear. This is typically linked to the ability of the central bank to print its country’s currency. 6.
However, the fact that Sweden was relatively well equipped to confront the crisis, in combination with other factors, contributed to a rapid recovery of the Swedish economy. During 2010, GDP increased by more than 5 per cent. Thus the increase was as large as the decrease had been the year before. And some of the reasons behind the pronounced decline also explain the rapid recovery. I will cover this in the first part of the speech. But Sweden was also lucky that the crisis did not have more severe consequences. As in many other countries, the crisis exposed vulnerabilities in the regulatory and supervisory framework for financial stability. The key conclusions we draw are not unique for Sweden and I will spend the rest of the speech outlining these issues and what we are doing to deal with them. Why were both the recession and the recovery more pronounced in Sweden than in the rest of the world? Sweden is indeed a small, open economy! Our exports and imports are approximately 50 and 40 per cent of GDP respectively. This is the main reason why the Swedish economy was hit so badly during the recent international recession, as global trade collapsed. While exports in the euro area and the United States fell by approximately the same amount as in Sweden, our higher export share meant a larger impact on the economy.

Yet, in the case of these countries, there is a real risk posed by speculative capital inflows. As long as negative real interest rates prevail in Europe, straying too far away from our regional peers in terms of policy rate would invite considerable appreciation pressures. While helpful in terms of taming inflation, these would not be welcome, given Romania’s increasingly significant external imbalance that is singular in the region in terms of size and trend. It owes to the faster growth of domestic absorption than that of domestic output, as well as to non-price competitiveness issues manifest in certain production sectors. Therefore, striking the right balance in terms of the interest rate differential is of the essence. After the tightening undertaken so far in Romania (including three policy rate hikes in the first half of 2018), it is probably wise to proceed cautiously in the future. 2/3  BIS central bankers' speeches  Which brings me to the last issue I would like to address: what is advisable in terms of economic policies in order to cope with any future adverse developments. For the sake of simplicity, allow me to try to formulate three general rules that are instrumental in dealing with such developments. First of all, irrespective of the possible scenarios, it is wise to put your house in order before the storm comes. One example is fiscal consolidation, which is paramount for the economy.