samchain/econo-pairs-v1 huggingface dataset:
It must be cautioned that the true equity risk premium is unobservable, and so estimates may well be wide of the mark. But there is a possible story, related to changes in the global distribution and management of savings. The managers of the now massive official foreign exchange reserves in Asia have a clear preference for fixed-income securities, both absolutely and relative to say the US household sector. And in the West, defined-benefit pension fund trustees and managers have been placing greater weight on matching the duration of their quasi-fixed income liabilities with holdings of bonds. In both cases, there may have been a de facto shift in global demand from equities to fixed-income securities of various kinds. That would tend to alter relative risk premia9. All told, this seems to reduce the candidate explanations for Rogoff’s puzzle. For equities, fluctuations in equity risk premia may have been a factor, driven by the dotcom/telecom fad and shifts in global investor preferences. For financial assets more generally, perhaps the best provisional view is that volatility in asset returns may have been elevated for a while by the effect on prices of the reductions in default-free rates, term premia and credit-risk premia associated with the Great Stability. As well as adding to volatility temporarily, that will also have raised ex post returns, in which case it would be important that market participants did not act on the basis that they were easily sustainable.

However, some countries have gone the opposite way by moving securities and insurance supervision under the umbrella of the NCB. They have benefited from the independence and resources of the NCB. On the other hand, these sectors require partly different staff skills and methods and they include issues which are normally outside the mandate of a central bank such as investigations of market conduct and law enforcement actions against individual firms or persons. Failures in securities and insurance companies may affect overall confidence in the NCB, although these institutions are in most cases of limited interest to the NCB from the point of view of financial system stability. Such failures might even lead to what Professor Goodhart calls “a creep of the Central Bank safety net” 4 implying that exceptional liquidity assistance might be used for non-systematically important institutions. My conclusion is therefore that you should only bring securities and insurance supervision into the NCB if this is needed because they can not fulfil their tasks outside the NCB for some reason such as lack of independence or human resources. After having discussed whether supervision should be inside or outside the Ministries and the NCB, I now turn to the issue of unified supervision. These are some often-heard arguments for the consolidation of supervisory authorities: Consolidating supervision in one authority Information sharing and coordination will be facilitated if the different sector supervisors are located in the same authority. In my experience this is mostly true, both for practical and legal reasons.
8  Nonetheless, other economists suggest that skill-biased technological change - by favouring top earners relative to 7  See Piketty, T., E. Saez, and S. Stantcheva (2014): “Optimal taxation of top labor incomes: A tale of three elasticities,” American Economic Journal: Economic Policy, 6 (1), pp. 230-271. 8 See, Piketty T., E. Saez and S. Stancheva (2014), op. cit. p. 245. 4  average earners - is at the root of this income concentration pattern. This debate has by now reached the public arena. 9  Third, from a macro perspective, a growing segment of the literature advocates a move from the standard new Keynesian framework, based on representative agents, to models that account for household and firm heterogeneity, in order to better understand the transmission channels of monetary and fiscal policy. This literature speaks directly to central bankers, since it challenges some of the basic tenets of our traditional understanding of monetary and fiscal policy. For example, a heterogeneous household framework is crucial to assess the extent to which additional revenue can be raised by making income taxes more progressive. In this regard, a recent paper emphasizes that the revenue impact of a more progressive tax schedule in the US should be assessed in light of the reaction of agents along the income distribution, and the aggregate changes triggered as a result.

In November of 2013, the Bank outlined proposed regulatory reforms for the financial advisory industry which formed part of the “Life Insurance and Family Takaful Framework” or in short the LIFE Framework, which we published for consultation. An important aim of the reforms is to support the Bank’s desire to further diversify insurance delivery channels as one – although not the only – way to improve the quality of advice, and enhance choice and value for consumers based on their specific needs and circumstances. This in turn would contribute towards increasing the insurance and takaful penetration rate to 75 percent by 2020 as targeted under the Government’s Economic Transformation Programme (ETP). We received positive feedback from the financial advisory industry on the proposed reforms and while specific elements of the LIFE Framework remain under review to take into account the comments that were received, we have moved ahead to implement several changes proposed which concern the financial advisory industry. The Bank has lowered the minimum capital requirement for financial advisers to RM50,000 which will take effect from 1 January 2015 to encourage more advisers to enter the industry. This follows an increased focus on professionalism, innovation and quality of advice as the hallmark of those who are admitted to the industry.
In addition, a sufficiently detailed disclosure of borrower characteristics and the performance of the loans over time would be important to revitalise the market. This is also of critical importance to the central banks in  7  Scheduled to be completed by June 2008. 8  Scheduled to be completed in 2009. BIS Review 68/2008  7  the Eurosystem, not only as market watchers but also, as I mentioned earlier, in the performance of their task of providing regular refinancing to the banking system against adequate collateral. Here I would like to echo the recommendations on transparency in 9 securitisation markets made by the Financial Stability Forum to have standardised information about the pools of assets underlying structured credit products. Supervisors and central bankers are encouraging and monitoring the market-led initiatives by the European Securitisation Forum and other international organisations and will evaluate the adequacy of these measures as well as their implementation to assess whether they need to do more. Having said that, I would like to underscore again that the interventions of public authorities cannot substitute the need for the market to enhance disclosure by providing information that will facilitate the assessment of the situation of financial institutions and financial instruments. This will eventually lead to reinstatement of confidence in the ability of the financial system to manage risks properly. I thank you for your attention and I wish you all very interesting days here in Cannes. Chart 1.

These weaknesses as well as related policy recommendations from a wide range of fora and organisations have attracted considerable attention over the past months. In my final remarks today, I would like to focus on an area with major repercussions for the smooth functioning of markets, namely: transparency . There is common agreement on the view that a sound transparency framework based on improved disclosure, high-quality accounting standards and solid valuation practices is pivotal for ensuring market confidence and enhancing market discipline. In this respect, the financial market turmoil brought to the forefront a number of shortcomings: disclosure of information on risk exposures to and valuations of structured products and off-balance sheet vehicles proved to be opaque and very diverse in terms of scope and detail, complicating comparison across financial institutions. Furthermore, at the instrument level, the information provided to the market by institutions involved in the securitisation process has been limited, especially in relation to the quality of underlying asset pools. This lack of transparency both on exposures to instruments and at the level of the instrument itself contributed to the loss of market confidence and, as I mentioned earlier, led to disruption in various segments of the financial markets. The complexity and opacity in instruments supported also to an overreliance on ratings and rating agencies.
This is not surprising because other countries’ currencies also fluctuate. Exchange rate fluctuation is a structural feature of open economies like Norway that have their own currency. The Norwegian krone does not stand out as particularly unstable. On the contrary, in countries like Sweden, the UK, Switzerland, Australia, Canada and New Zealand, exchange rate fluctuations are as wide - or wider - than in Norway. There is a cost involved for businesses in hedging against fluctuations in the krone. However, a krone that is stable - but too strong - also entails costs in the form of low activity. Similarly, a krone that is stable - but weak - is a source of high inflation. The capital outflow through the Petroleum Fund contributes to both curbing the appreciation of the krone and maintaining its stability. When inflation in Norway is expected to be broadly in line with that of other countries, the exchange rate will normally also return to its normal range following periods when the krone has been particularly strong or particularly weak. This may provide a basis for stable exchange rate expectations. Normally, the interest rate is set with a view to achieving inflation of 2½ per cent at the two-year horizon. Norges Bank operates a flexible inflation targeting regime, so that weight is given to variability in inflation as well as to variability in output and employment. Monetary policy affects the economy with a lag.

Moreover, there now seems to be a tendency towards investing in property and taking up loans at a more mature age so that younger generations not only inherit dwellings, but debt as well. Both debt and wealth are on the rise for these more mature age groups. Sharp increases in asset prices and debt accumulation may pose a risk to economic stability. With a view to mitigating this risk, it will be appropriate in some situations to apply a somewhat longer time horizon than the usual two years to attain the inflation target. At present, however, debt accumulation is high only in the household sector. There is little borrowing activity in the enterprise sector. House prices are rising, but prices for office space are stable. Output and employment are at trend level. Unemployment is on a par with the average for the 1990s, wage growth is consistent with the inflation target, credit growth is close to long-term nominal GDP growth, relative labour costs and prices are approximately at the same level as the average for the past 30 years and the interest rate differential is close to zero. But inflation is low, as a result of the lagged effects of the strong krone, low import prices and high productivity growth. The analyses in the inflation report indicate that inflation will remain low this year, picking up thereafter. The krone depreciation since January 2003 is expected to push up prices for imported consumer goods.
The Norwegian government has not always managed to settle its debts, but by little fault of its own as Norway was left with considerable government debt after the secession from Denmark in 1814. The government had no Treasury or liquid assets. Attempts to increase tax revenues failed. Moreover, Norway had little creditworthiness. At the beginning of 1816 the government was not in a position to service its debt. After more than four years, the debt was negotiated down from 6 to 3 million speciedaler. The entire principal was to be repaid over a ten-year period. In January 1820, Norway concluded a loan contract with the finance company Benecke Brothers in Berlin. 6 It was positive for a young nation to be able to borrow, but the terms of the loan were generally perceived as being poor, and the loan was popularly referred to as “tyvelånet” (highway robbery). All government property and current customs revenues were required as collateral. After a period, the “tyvelån” was replaced by a loan on more favourable terms. After the Great Depression in the 1930s, many European states struggled with debt problems. Government debt was written down in Austria, Greece, Hungary, Poland, Romania and Turkey in the 1930s and 1940s. Germany was not able to pay war reparations after World War I. Since World War II sovereign defaults have only occurred in developing countries and emerging economies, particularly in the period between 1980 and 2000. Many of the countries pursued a policy that resulted in high inflation.

Public occupational pension schemes seem to enjoy slightly stronger constitutional protection than national insurance pensions, but the Supreme Court has  14  ROBEK – register of all municipal and county authorities subject to approval pursuant to Section 60 of the Local Government Act. 15  See discussion in Appendix 5 to the Report of the Pension Commission (NOU 2004:1). 8  BIS Review 123/2010  repeatedly stressed the authorities’ need for freedom of action when it comes to making changes to pension schemes. The Norwegian national insurance scheme is a pay-as-you-go system. This means that a given year’s pension payments from the scheme are covered by government budget revenues that year. When the national insurance scheme was introduced in 1967, a fund was established to provide for an expected reduction in private saving. However, pensions were still included in the central government budget at an early stage and financed by current tax revenues. Transfers to the National Insurance Fund were soon discontinued. Nevertheless, confidence in the pension system has actually remained intact, reflected in a low level of household saving, primarily through home investment. Perhaps there is some element of miscalculation here. A fall in value may occur if many homeowners free up housing capital to cushion old age. (See Chart: Government Pension Fund Global.) It was only when transfers to the Petroleum Fund were introduced in 1996 that funds were accumulated that could also be used to cover future pension payments.
We can use a model to explain GDP across a range of countries using the stringency of their lockdowns in that quarter, as well as a range of other country-specific factors (Chart 7).10 That model suggests world GDP will be 15% lower in Q2 than at the turn of the year, compared to 26% in the May MPR scenario. Chart 7: Lockdown stringency against GDP growth over 2020 H1 GDP change from 19Q4 to 20Q2, %  10 5 0 -5 -10 -15 -20 -25  UK  -30 -35  0  20  40 60 80 100 Average Oxford stringency index over quarter  120  Sources: Apple, University of Oxford and various national data sources. Notes: See Footnote 10. 10  For a panel of 55 countries, we employ a forecast combination analysis of around 20 different regression models, each of which uses different sets of explanatory variables and the final forecast is a root mean square error weighted average of forecasts from all our specifications. The variables we use are containment, economic and health policy response indices, which are calculated in-house using the Oxford University Covid monitoring database, Apple mobility trends and country characteristics, e.g. share of exports in GDP, dummies for income level and geographic region and average GDP growth between 2014 and 2018. We also include containment policy characteristics such as the maximum containment policy response and the time spent at this maximum response in a quarter.

In Remaking Malaysia, the strategy is essentially to focus on our distinct capabilities and to leverage on the areas of our strengths to secure our competitive advantage. Let me touch briefly on the current economic developments: •  Malaysia has seen a steady and strengthening economic recovery since 2001, with the growth performance strengthening substantially in the first half of this year increasing the potential for growth for the year as a whole to surpass our earlier estimates. •  This favourable performance has been accompanied by a rebalancing of focus between external and domestic sources of growth. In the external sector, there has been a greater balance between the traditional and new markets and between the goods and services sectors. •  In the domestic sector, there has been a greater balance between the economic sectors. The strategy to have a more diversified economic structure and more extensive markets has aimed to reduce vulnerability of the economy to global shifts in demand in any specific sector or to any particular region. •  The positive fundamentals of low inflation, strong external balance, low debt and stable employment conditions have accorded policy flexibility to support the growth during this period. Going forward, the process of rebalancing the economy to enhance the competitiveness of the economy can be expected to intensify and widen.
This is mainly because it is necessary to give time to the transmission mechanisms of the monetary policy to work, so that the consequences of decisions already made can be seen in practice. Final remarks I would like to end with some lessons about monetary policy conduct which have stemmed from the great inflation rise that has taken place since mid-2007, into our current international situation. In the first place, many times it had been noted that Chile was one of the countries where the highest increase in inflation – more than tripling the target – was observed, with the interest rate rising less than in other economies with lower inflationary pressures. As I have already argued, our policy response was completely consistent with a flexible monetary policy framework. As the price shock became stronger and more persistent, monetary policy became more restrictive. This same flexibility in managing monetary policy enables us to react quickly to the strong deterioration of the external conditions today. Fortunately, our economy is solid enough to absorb significant changes in the course of monetary policy, without this being a threat to stability. In the second place, inflationary dynamics are highly complex and cannot be linearly mechanized based on historical evidence. Early this decade, when inflation was consolidating at low levels, we saw that persistence of inflation had dropped substantially, thereby reducing the impact of propagation via indexation and other phenomena that were characteristic of our high-inflation past (García and Valdés, 2005).

(2008), “The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong,” NBER Working Paper # 14631. 7  We could argue that, as it was done when inflation rose, it was the result of the domestic demand cycle which, after growing fast, slowed down dramatically. However, slowdown of demand is happening throughout the world and a decrease in inflation is observed at a much higher level in Chile. Therefore, we are witnessing structural factors which go beyond changes in demand. 8  BIS Review 41/2009  Table 1  Projected Growth for 2008  (GDP measured at market prices, percent) Sep. 2008  Dec. 2008  Mar. 2009  World  2.5  0.4  -1.6  United States Eurozone Japan  1.4 0.9 0.9  -1.3 -0.9 -0.9  -2.8 -2.6 -5.8  Asia Pacific Eastern Europe Latin America  4.6 5.6 3.7  2.7 3.0 2.1  -0.2 -0.5 0.3  Source: Consensus Forecasts of corresponding date. Figure 1  Chile's MPR and US Fed funds  (percent) 12  12  10  10  8  8  6  6  4  4  2  2  0  0  90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Fed Funds  MPR (*)  (*) As from August 2001, the monetary policy rate is set in nominal pesos; before that, it was indexed to headline inflation.
They helped to check the signs of panicky behaviour in the market and then to restore a more optimistic assessment of the future. At the same time, the process displayed some ability to heal itself. All this has contributed to a rapid recovery in the global economy as well as in Sweden. The current picture of many economies is thus very different from the uneasy situation that prevailed during 1998 and the early part of 1999. Global growth prospects are appreciably better and the risks connected with inflation have changed. That is also why instrumental rates were adjusted upwards by many central banks last autumn and early this year. In principle it can be said that inflationary pressure follows a cyclical pattern. When economic activity is strong, demand growth tends to exceed the expansion of capacity and this normally leads in time to an accelerating rate of price and wage increases. Conversely, weak demand may lead to the prospect of inflation being below the target one to two years ahead. As a rule, the repo rate should be raised in the former case and lowered in the latter. In this way, the repo rate varies with the business cycle so that the rate of inflation remains more or less continuously in line with the target. So, as rising economic activity successively reduces the degree of unutilised resources in the economy, the repo rate has to be increased. That is the process the Riksbank has initiated with the increases since last autumn.

Mr Bäckström reports on the Swedish economy and monetary policy  Speech given by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, to the FöreningsSparbanken, in Malmö on 16 February 2000. *  *  *  The repo rate increases In order to understand why the Riksbank has raised the repo rate in two steps from 2.90% last November to 3.75% less than a fortnight ago, it is necessary to consider the situation in 1998. The mood at that time, in the global economy as well as in Sweden, was coloured by the Asian crisis, the suspension of Russian payments, the problems with the hedge fund Long Term Capital Management and falling stock-market prices. It was considered that in addition to direct problems, the financial crisis in the autumn of 1998 would have negative effects on real economic activity. Forecasters altered their assessments and the prospects for global output and inflation were revised downwards. Central banks around the world did likewise and the Riksbank was no exception. Instrumental rates were reduced in many countries. Between the early summer of 1998 and the spring of 1999 the Riksbank cut the repo rate by a total of 150 basis points, bringing it down from 4.40 to 2.90%. The actions of central banks probably mitigated effects of the various shocks.