samchain/econo-pairs-v1 huggingface dataset:
If the 15  government succeeds in negotiating a “new, comprehensive, bold and ambitious free trade agreement ” with the EU, and in opening up trade with non-European countries, the UK’s overall degree of openness may not worsen and it could improve. If so, and all else equal, the currency should in time rebound. But this makes longer-term investment in the tradable sector a somewhat tricky decision. Either the currency market is too pessimistic, in which case sterling’s depreciation is likely to be reversed over time. Or it’s not, in which case the costs of exporting will eventually go up. Barring some other source of exchange rate weakness, such as a sharp rise in the household saving rate (which would have its own implications for the economy), the sweet spot is unlikely to last indefinitely. So while investments with shorter-term payoffs make commercial sense, especially for those already running up against capacity constraints, the uncertainties involved in longer-term decisions could temper the usually positive response of business spending to depreciations in the exchange rate. Indeed they’re probably already doing so somewhat. In its latest forecasts the MPC expects this caution to persist. That’s why, in the central projection in the February Inflation Report, growth slows slightly this year, from 2.0% at the end of last year to 1.7% by 2017Q4.

We’ve done this by passing the rise in both export and import prices through the UK’s input:output tables and used the same definition of tradables and non-tradables as before. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  higher output in the tradable sector. There is less room to raise output but more of an incentive to add to that capacity.   Third, and despite these incentives, growth of overall business investment in the UK was relatively weak last year. Early official estimates say it shrank slightly in the year to Q4, by around 1%. (This compares with positive growth of 2% or so in the Euro area.) And although those estimates are particularly prone to revision, the various survey indicators also subsided in 2016 (Chart 12). This last point is the critical one. The world economy is looking better than it has done for some time. Against this backdrop, and given the existing capacity constraints, the fall in sterling provides a powerful incentive to invest in the UK’s tradable sector. All else equal, it would make sense for existing exporters to expand; for domestic-facing firms to think about entering new markets; and for multinationals to shift production to the UK. Yet some caution would also be understandable. All else is not equal. While much is at stake, no-one can be sure about the eventual outcome of the Brexit negotiations.
William C Dudley: The longer-term challenges ahead Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Council of Society Business Economists Annual Dinner, London, 11 March 2010. *  *  *  Thank you for giving me the opportunity to speak here today. As always, my remarks reflect my own views and are not necessarily reflective of the views of the Federal Open Market Committee (FOMC) or the Federal Reserve System. As we emerge from a deep and protracted global recession and terrifying financial crisis, we should count our blessings – the outcome could have been far worse. Extraordinary interventions helped to keep the financial system from collapsing and large doses of fiscal and monetary policy stimulus helped to put a floor under global demand, thereby preventing a full-blown depression. However, now that we are on a bit of firmer ground, it is even more important that we take stock and evaluate the challenges that still face us. How we respond will determine whether the path forward will be relatively smooth or instead will be more tortuous. I want to discuss three of these challenges today. The first challenge relates directly to the recent crisis: What needs to happen at the national and international levels to strengthen the financial system so that a crisis of this magnitude does not occur again.

Even if stronger exports were to provide only a partial offset to the restraint from fiscal consolidation, the increase in demand generated by rebalancing  6  BIS Review 28/2010  would reduce the risk that the nascent recoveries might falter. This, in turn, would also reduce the risk of a protectionist backlash. To conclude, the structural case for rebalancing is compelling. The current cyclical circumstances reinforce this case. Thank you very much for your kind attention. I would be happy to take a few questions. BIS Review 28/2010  7
In a scenario when we see oil prices slump from the current relatively high levels, both business and household expectations are set to be negatively affected for a time. However, we expect no reversal in the current positive economic trend. We cannot rule out a certain slowdown in the paces of growth between late this year and early next year; yet subsequently, the economic 2 / 14  BIS central bankers' speeches  trends of today will prevail. Businesses will be gradually building up investment as they capitalise on their profits accumulated in prior years. The real sector’s ability to borrow will also improve over time. Alongside with softer monetary conditions, this will give extra impetus to growth in investment. Consumer demand will recover gradually on the back of growing revenues and improving expectations. This process is expected to be smooth and create no inflation risks. The recent strengthening in the ruble is set to bring about increased demand for imports in the first half of 2017. Moving forward, however, this growth is on course to become slower; in this way, exports are set to grow at moderate paces. In 2017–2018, economic growth will total about 1-1.5%, with acceleration to 1.5-2% envisaged as early as 2019. Still, potential economic growth will be invariably constrained by structural factors. Following this recovery period, paces of GDP growth are expected to be equal or less than 1.52%. The current account balance is expected to rise in 2017, prompted by higher oil prices.

The scope for flexibility in inflation targeting depends on how well inflation expectations are anchored at the target. Norges Bank’s experience, based on close to 20 years of inflation targeting, suggests that a small open economy must expect inflation to deviate fairly widely from the target at times, rising above target or falling below. But at the same time, inflation has remained within a range around the target where deviations from the target cannot be said to have entailed material economic costs. This has provided leeway to give weight to other considerations in the Bank’s monetary policy trade-offs. Other countries have come to other conclusions and have chosen to stretch the limits of monetary policy further to bring inflation back to target. If we some time in the future were to experience falling demand and a risk of deflation, we will use the instruments at our disposal to address this situation. Our job will be less difficult if fiscal policy also contributes. The primary responsibility of monetary policy, however, is to provide the economy with a nominal anchor, quantified by the inflation target assigned to Norges Bank. Our instruments will always be geared towards this objective. References Borio, C. and A. Zabai (2016) “Unconventional monetary policies: a re-appraisal”. BIS Working Papers 570 Dell’Ariccia, G., P. Rabanal and D. Sandri (2018) “ Unconventional monetary policies in the euro area, Japan, and the United Kingdom”.
Although many people have experienced considerable improvement in their living conditions in recent decades, there are still far too many who have not yet been given the opportunity to benefit from the increase in wealth. In addition, there are still substantial environmental problems in many areas. However, the good results we have achieved since the Second World War show that we are on the right track - we need more and better globalisation, not less! I therefore consider that there is good reason for confidence in our economic future, but also that it is important for us to safeguard what we have already achieved, to make use of future opportunities that arise and to tackle the challenges that come in the wake of globalisation. As I see it, a strong multilateral framework is necessary to enable us to manage these challenges effectively. The driving forces behind the increased wealth in the world After the end of the Second World War, the architects behind the new multilateral economic system were determined to avoid a repeat of the fiascos during the 1930s, when countries introduced tariff barriers, made competitive devaluations and set up obstacles for payments. These measures halved world trade and led to falling GDP figures and declining real wages, mass unemployment and political chaos in large parts of Europe.

Consequently, the current overall situation of the Swiss economy remains difficult despite the many rays of hope with regard to the economic cycle. Also, the danger of deflation does not yet seem to have been entirely averted. We have not yet reached the moment for a change of direction in monetary policy in Switzerland. After analysing the available economic data and forecasts and taking various risk considerations into account, there is no need for the SNB to take monetary policy action at present. The SNB can afford to adopt a holding stance. However, this holding stance should not be mistaken for inactivity. The SNB continues its firm implementation of an extremely expansionary monetary policy and the unconventional measures launched on 12 March 2009. The Swiss franc money market is still being provided with a generous and flexible supply of liquidity, interest rates remain low, Swiss franc bonds are still being purchased to dampen the level of risk premiums on the Swiss franc bond market as and when needed and the appreciation of the Swiss franc will continue to be prevented. BIS Review 27/2009  1
That is a massively attractive narrative one can offer for potential investors from all over the world. Now, if I may talk about some of the policy support offered by the Government. The EDB has initiated a National Export Strategy  which, as you know, is a collaborative effort between the Government and the private sector and it provides a five-year action-oriented frame work for the development of trade and competitiveness. Simultaneously, a National Trade Policy has now been drafted. It is a very neat 20-page document, very tightly and coherently drafted, and this is the first time we have formulated, in this concise way, the country’s trade policy, which for me, is actually very well presented. An Anti-dumping bill is also in Parliament. It is very important, if we are going to open up some sectors as part of the trade Page 15 of 17  agreements. The Government is also working on a Trade  Adjustment Package  with the World Bank and the International  Trade Center, in Geneva. What that intends to do is to assist  companies, which are going to be affected by liberalization to become more competitive, and also to assist workers, whose jobs have been threatened, to re-train. Now, I’ve talked on SMEs, for export promotion. There are four areas where they require support. 1. Training; 2. In-puts, including technology; 3. Access to finance; and 4. Marketing. Invariable the biggest challenge is marketing.

An issue of the highest priority for the Basel Committee has been to ensure that the financial markets never again suffer such a severe case of liquidity fever as the one we saw in the initial phases of the financial crisis. The Committee has therefore required the banks to hold sufficient liquidity to cope with a highly-strained market situation for a period of at least 30 days and to better match the maturities of their assets and liabilities. Another cornerstone of the Basel III regulations is increased capital requirements for the banks. The idea behind this is simple: more and better capital will increase the resilience of the banks. This in turn will increase confidence in the banks and in the system as a whole. It has proved to be increasingly important to have a large capital base, not least in order to get access to the capital markets. However, the exact capital ratios for an individual bank should be subject to national decisions. As long as the responsibility for dealing with systemically-important banks lies at the national level then the right to set the size of “risk premiums” should also lie there. An interesting instrument that has been put forward within the framework of Basel III is countercyclical capital buffers, which entail the banks holding extra capital in good times that they can then use when times are not so good.
12 See, for example, Stapleton et al. (2017), “Climate change, migration and displacement – The need for a risk-  informed and coherent approach”, report by the Overseas Development Institute and the United Nations Development Programme, November. 13 See ECB (2018), “Labour supply and employment growth”, Economic Bulletin, Issue 1. 14 See Bundesbank (2018), “Wage growth in Germany: assessment and determinants of recent developments”,  Monthly Report, April. 15 The International Energy Agency estimates that, by 2025, there will be a shortfall of more than 20 million barrels  per day. Recent marked oil price increases suggest that the advent of unconventional oil extraction technologies has not yet sufficiently changed supply dynamics to contain sharp increases in prices. One reason may be that the market share of shale producers, despite having expanded considerably in recent years, may still be too low to affect aggregate figures. See, for example, Bjørnland, H., F. M. Nordvik and M. Rohrer (2017), “How Flexible is US Shale Oil Production? Evidence from North Dakota”, Centre For Applied Macro – And Petroleum Economics (Camp) Working Paper Series, No 2/2017. 16 The pass-through of oil price shocks is one of the most well studied phenomena in monetary economics. Google Scholar currently shows around 28,800 academic papers containing the exact phrase “oil price shock”. Of those, some 11,600 also contain the exact phrase “monetary policy”.

But a more contentious debate has emerged over the potential use of our asset purchases to pursue climate-related goals. Our corporate sector purchase programme in particular has come in for criticism as it includes emission-intensive sectors, such as manufacturing and utilities.30 In this debate, it is important to recall that the ECB decides on and calibrates its monetary policy measures with a view to achieving its price stability objective under the Treaty. As a consequence, more than 80% of the € trillion of securities purchased under our Asset Purchase Programme were issued by governments or their agencies. The remaining share consists of purchases of covered bonds, corporate bonds and assetbacked securities. For these assets, the Governing Council concluded that the best way to achieve its monetary policy objective was to follow the principle of market neutrality.31 This principle does not preclude supporting environmental objectives, however. 32 The ECB has purchased “green bonds” both under its public sector and corporate sector purchase programmes. Under the former, we currently hold around 24% of the eligible “green” universe, estimated to amount to some € billion. Under the latter, we hold close to 20% of the eligible “green” corporate bond universe, which currently has an outstanding volume of € billion euros. Under both programmes, the share we hold in “green” eligible bonds mirrors, by and large, the share of our holdings of the entire eligible universe.
The degree of wage flexibility is also affected by social norms - reductions in nominal wages are most often considered unacceptable. It appears that nominal wage reductions can only be implemented in extreme situations, for instance, if a company’s survival is at stake. EMU membership might not comprise a sufficiently major change. Econometric studies of how wage flexibility is affected by, for instance, ERM membership give mixed evidence. Wage formation thus represents an uncertainty factor. Some studies indicate greater wage flexibility and others show no effect at all. The conclusion reached by the stabilisation policy committee is that Swedish membership of the Eurosystem most likely will entail wages becoming more flexible, 6 but that changes could be limited. The Riksbank has not yet taken a stand on the committee’s report; we will be presenting our views on it in the autumn. The consequences of excessively high wage increases in the event of Swedish membership of the Eurosystem can be compared to “learning the hard way”, i.e. that Sweden would lose competitiveness and suffer rising unemployment. This type of development could force an adaptation in wages in the long run. However, it risks being a costly route, particularly with regard to unemployment, which could stick at higher equilibrium levels than before. In other words, it is something that we should all endeavour to avoid.

This means that the curve normally has a negative slope. An outward shift in the curve can be interpreted as deterioration in matching in the labour market, as the number of vacancies for each given level of unemployment is higher. Movements along the curve may depend on economic changes. When there is an improvement in the level of economic activity, the number of vacancies and recruitment rise, but at the same time the difficulties and time required to fill the vacancies increase. The large rise in the unemployment rate in Sweden at the beginning of the 1990s was followed by a reduction in the number of vacancies, which can be interpreted as a movement along the curve. During the mid-1990s, unemployment appeared to have stabilised at a high level, but in recent years unemployment has been held back, while the vacancy ratio has risen. The Beveridge Curve appears to lie further out than before, which could indicate that the matching process has deteriorated and that the labour market has become less flexible. One reason for a possible outward shift could be that the persons who became unemployed during the crisis years of the 1990s have had difficulty in returning to the labour market.
Given how much debt banks will need to refinance or repay to the authorities around the world over the next few years, the Bank is keen – as reflected in the recently published minutes of the Chancellor’s Council for Financial Stability – that individual banks agree indicative refinancing plans with their supervisors; and that at least aggregate national conditions be shared amongst international peers. That would help to avoid each bank thinking that it can  2  BIS Review 21/2010  delay its effort, risking an almighty scramble in eighteen months or so when official-facilities will be running off. As household sector saving has risen and as banks have deleveraged, government borrowing has increased very sharply as it helped to absorb the macroeconomic shock. Without too much exaggeration, this can be thought of as a rescheduling of private sector debt facilitated by the only balance sheet currently strong enough to bear it – HMG’s. But, like financial services, the public sector had accounted for an increasing share of measured output in the run up to the crisis. And since a good deal of that was debt financed, this source of support is not unlimited. Indeed, those two sectors have to be part of the process of rebalancing demand and activity in the economy over the years ahead. Overall, the rebuilding of balance sheets and the rebalancing of demand pose a downside risk to the outlook for activity. Effective supply, and inflationary pressures Repair of balance sheets will affect the path of demand. What of supply?

This country suffered too much from the inflationary booms and busts of the past for us to take risks on that score – in either direction. QE: the stimulus to nominal demand, and the financing of the banking system To avoid the downside risks, we need to help to revive the economy. And the monetary stimulus is, of course, directed at a big deficiency of nominal demand in the economy. At our latest monthly meeting in early February, the MPC maintained Bank Rate at 0.5% and the stock of money injected via asset purchases at £ The money market yield curve has edged down slightly since then. Over the past year my colleagues on the MPC have variously set out the key mechanisms through which Quantitative Easing (QE) should work. I shall not go over all that ground today, but there is unavoidable uncertainty about the speed and potency of QE’s effects. I am minded to think that some of the effects will come through fairly gradually. And therefore I would stress that the monetary stimulus from QE has not stopped. The flow effect of our bond purchases on gilt yields is not the beginning and end of how QE provides monetary  4  BIS Review 21/2010  stimulus. Plainly the mechanisms through which our money injections affect the economy differ in some respects from the transmission of changes in Bank Rate, which in an economy with a lot of (net) floating-rate debt can affect household and business borrowers’ cash flows quickly.
Optimists already see a stabilization of the situation and light at the end of the tunnel, and they may well be right. But deepening recession in Japan, emerging problems in Latin America, and questions about the stability of the U.S. and European markets still raise serious concerns that what began as a regional crisis may swell into a crisis of global proportions. Hong Kong is located at the very heart of the East Asian region, and our economy is intricately, and increasingly, linked with the other economies in the region. It is therefore hardly surprising that we should have experienced some considerable stress as a result of the Asian crisis. Over the last year we have seen a roughly 50% decline in the value of property and stocks, a rise in unemployment, and a forecast contraction of 4% in our GDP for 1998. Although the stock market and property prices have seen something of a rebound during the last month, the pain of what has become an extensive economic adjustment continues, and is likely to continue for some time. It is necessary to stress, however, that this is an adjustment, not a collapse, and that it has been one of the least dramatic, and least traumatic, of all the upheavals in the region. In US dollar terms, the Hang Seng Index has, since the crisis erupted last July, seen the smallest decline of any stock market in the region. Our banking system has remained stable and solvent.

Whatever uses other economies might have for them, exchange controls are out of the question for Hong Kong: the Basic Law, which sets out our basic principles of government, expressly prohibits them, and, even if it did not, we know that, at least for Hong Kong, any attempt to introduce them, and to turn inwards on ourselves, would spell the end of our prosperity. But free market principles cannot mean markets that are left defenceless against manipulation. One troubling aspect of the Asian crisis, and a sign of larger problems in the world financial system, has been the extreme volatility in markets created by the rapid flows of highly leveraged funds around the world. As markets in the region became more vulnerable, these flows increasingly took on a predatory character and became more and more subtle in their planning and sophistication. This August, as you know, the Hong Kong financial markets became the target of a well planned attack by international hedge funds. We took unconventional actions to fend off that attack and to fortify our financial system against future attacks. Not unexpectedly, these actions have been the cause of extensive controversy, and of a great deal of misunderstanding. Let me attempt to present the issue from Hong Kong’s perspective by outlining what happened in August and explaining why we took action. Oddly enough, Hong Kong became a target because of the transparency of its financial system: we were singled out for our efficiency and predictability rather than for any fundamental flaws.