samchain/econo-pairs-v1 huggingface dataset:
While Malaysia will always be affected by such external developments, the strategy has been to have the flexibility to absorb and adjust and the strength to rapidly rebound. While each crisis or setback has been different, there are several common features that have allowed Malaysia to rapidly recover from such shocks. For each respective major shock confronting our economy, Malaysia has registered V-shaped recoveries. This has essentially reflected the flexibility of the economy to adjust and the early and comprehensive policy response. The ensuing periods were often marked by structural reforms and institutional development that were designed to rebuild the fundamentals of the economy, address the weaknesses and vulnerabilities and to forge new areas of growth. This has, decade after decade, resulted in vital changes in our economic structure, from being export-led to now being predominantly domestic demand-driven, and from being over-reliant on specific sectors to having a more diversified economic structure with the manufacturing and services sectors having now transitioned to higher value added activities. In essence, the structure of the economy has now become significantly more diversified in terms of sources of growth. While the export sector remains an integral component of our economy, domestic demand has now become the key driver of growth, anchored by strong private sector activity that now accounts for 70% of GDP. Underpinning the robust domestic demand is the sustained consumption spending and the revival of investment activity by the private sector.

Norman T L Chan: Excessive leverage – root cause of financial crisis Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Economic Summit 2012 “Roadmap to Hong Kong Success”, Hong Kong, 9 December 2011. *  *  *  1. Following the outbreak of the Global Financial Crisis in 2008, it is now generally recognised that serious imbalances in the global economy have been built up over the past 10–20 years. There are many different theories on how these imbalances came about and on their contributions to the Global Financial Crisis. A commonly held theory in western countries attributes the global imbalances and the financial crisis in the US and Europe to the so-called “savings glut” in the Emerging Market Economies (EMEs), especially China. In other words, the problems and miseries being experienced in the US and Europe arose because the EMEs not only over-exported, over-saved and under-spent, but also have been lending moneys at very low rates to the industrial economies and have financed the consumer booms and fuelled the credit and asset bubbles there. I do not subscribe to this view. However, given the complexity of the global financial system, it is very hard to try to come up with a grand theory that can fully explain what has gone so badly wrong that it has resulted in the worst Global Financial Crisis since the World War II.
The dominant role of the household sector in the early stages of the recovery is not particularly surprising: businesses are likely to need a sustained pickup in demand before they have either the need or the confidence to increase capacity. But the durability of the recovery will depend on the baton of growth being handed over to the corporate sector, whose spending and investment will help to foster stronger growth in productivity and real incomes. And here the reduction in uncertainty may continue to play an important role. It’s perhaps easy to see how reduced uncertainty may help to prompt a one-off increase in business spending, as companies move away from defensive, wait-and-see strategies and blow the cobwebs off plans for deferred investment projects. But the impact of diminished uncertainty may stretch beyond simply a short-run boost. In part that reflects the possibility that the combination of reduced uncertainty and increased spending by households and companies may become self-reinforcing: reduced uncertainty helps to spur additional spending and investment, which in turn further reduces uncertainty about future demand and so on.7 Movements in uncertainty can amplify the recovery just as they amplified the downturn. This virtuous circle may be enhanced by the benefits reduced uncertainty can have for the supply-side of our economy. Increased investment will add to our productive capacity. A strengthening labour market may give employees confidence to move jobs, so better aligning available skills with vacancies.

Housing transactions and mortgage approvals have started to show signs of life. House prices have picked up. A healthy housing market is good for our economy and will help to support the recovery. Most importantly, it will underpin further increases in house building, which has played an important role in driving the economic growth we’ve enjoyed this year and which, as a nation, we need to see. It will foster greater labour mobility by allowing people to move more easily to where new jobs are being created. It will help to support consumer confidence. But let’s not be naive. Anyone with more than a passing interest in British economic history is aware that the UK housing market has a sort of microwave type quality to it, with a tendency to turn from lukewarm to scalding hot in a matter of a few economic seconds. The Bank is fully aware of this risk. The good news, however, is that it’s far better equipped to respond to these types of risks than in the past. In particular, the new Financial Policy Committee (FPC) – the sister Committee to the MPC – has explicit responsibility for maintaining the resilience of the financial system. And, together with the other regulatory bodies, the FPC has the policy instruments which can address potential excesses in the housing market – and in other markets – which pose a threat to the stability of the financial system.
Freedom with responsibility Independence is accompanied by requirements for evaluation and follow-up: freedom with responsibility. One question that rose in connection with the new Sveriges Riksbank Act was whether the independence was “undemocratic”. This was discussed, for instance, by the then Deputy Governor of the Riksbank Villy Bergström. 13 One point he made was that the reason why monetary policy has been increasingly delegated to independent central banks was to address the shortcomings of the political system with regard to attaining low and stable inflation. Clear accountability and strong transparency are therefore essential factors in maintaining the legitimacy of the central bank. It is no coincidence that the international trend of increased independence among central banks has gone hand in hand with increased transparency and clarity. For instance, it was written into the new act that the Riksbank must provide a written report to the Riksdag twice a year. It should be easy to evaluate monetary policy. This is also made easier if we are aiming towards a clearly quantified target, in our case an inflation rate of 2 per cent. To delegate monetary policy with, for instance, the task of contributing to “high welfare” would leave too much scope for interpretation. As you probably know, the Riksbank has made major efforts along the way to increase openness and clarity regarding monetary policy, in a dialogue with the Riksdag Committee on Finance (FiU).

When the ECB made its monetary policy even more expansionary in spring 2015, we extended our monetary policy measures by both cutting the repo rate below the previously assumed lower bound of zero, and purchasing government bonds (that is, using quantitative easing). As the financial markets were functioning normally, the measures had the desired impact on the interest rates charged to  19 The way that a lower neutral interest rate affects the conditions for monetary policy was something I discussed in greater detail in October last year: see Skingsley (2020). 20 See Bernanke (2015). 21 See Elmér et al. (2012) for a description of the Riksbank’s monetary policy measures during the financial crisis. 7 [20]  households and companies. Inflation began to rise towards the target (see Figure 3). Developments during the financial crisis and the European debt crisis that followed made it perfectly clear that a flexible monetary policy toolbox is useful both in times of financial unease and in normal circumstances, to safeguard target fulfilment. I will return to this issue later on. Discussion on central banks’ mandates and tools In the wake of the financial crisis, financial stability quite naturally became a standing point on the agenda. One of the main effects of the crisis was the emergence of a new policy area: macroprudential policy. In many cases, responsibility for this policy was given to the central bank.
That is consistent with an influence of  5  With four lags of each variable on the right-hand side and a full set of time and country fixed effect dummies for sixteen countries over the period 1975-2007, the F-statistic for the exclusion of house prices in the equation for the current account is 8.2, while the F-statistic for the exclusion of the current account in the house price equation is 4.2. 6  BIS Review 101/2009  the imbalances on asset prices. But equally the results could just indicate that both variables are affected by the state of the business cycle. What went wrong? While the macroeconomic environment may have provided fertile ground for the credit/asset price boom to develop, to explain both the extent of the growth in credit and the magnitude of the subsequent crisis one needs to dig down into what was happening inside financial markets. And when one does that, one finds a variety of incentive distortions and information problems that appear to have played a central role. Distorted incentives Banks are vulnerable institutions because they make long-term loans with uncertain returns that are financed predominantly by short-term debt instruments and callable deposits. If creditors think that the borrowers will be unable to repay the loans, then there is every incentive for them to run. That is why banks are required to hold a buffer of capital and reserves large enough to absorb losses in most feasible states of nature.

Ordinary US mortgage loans are usually non-recourse and offer the borrower the option of both early repayment and of default if the price of the house falls below the value of the loan, leaving the lender to recover what they can from re-sale of the house at what will be an uncertain price. US sub-prime mortgages also embed an option for the lender. Essentially sub-prime mortgages are structured as a rolling sequence of short-term loans, with the lender sharing in some of the increase in housing equity when house prices rise and having discretion over whether to offer a new and affordable loan depending on whether house prices have risen or not (see Gorton, 2008, for further details). As a consequence of these embedded options, RMBS, particularly of sub-prime mortgages, have a rather complex payoff structure that is tricky to price and difficult to monitor. CDOs are yet more complex. These re-package the payoffs in bundles of asset-backed securities into an ordered hierarchy of other securities, with each tranche only bearing losses once tranches above it have been wiped out. A bundle of risky assets could thus be repackaged into other assets, some of which offered bond-like returns suitable for investors such as pension funds seeking low-risk assets, while the tranches bearing more risk would be sold to those willing to carry more risk 6 . But the pay-offs to these assets are highly nonlinear in the underlying risks (see Fig. 11).
Let me start by saying that New Jersey is well-positioned for growth. The state has a population of 8.8 million, the 11th largest state, and despite the fact that this is a fairly mature region, the state’s population expanded by 4.5 percent over the past decade. More than 40 percent of the population 25 years of age and older in the state have a college degree, a full 5 percentage points higher than the national average. Our population is quite ethnically diverse: roughly 20 percent of the state’s residents were born abroad, and that share is even higher in Essex and Bergen counties. Significant numbers of the foreign born residents in the state come from India, Mexico, the Philippines, the Dominican Republic and Korea. The state’s economy is also quite diverse, and its industry mix mirrors that of the national economy. A sizeable number of jobs in the state are in the healthcare, professional and business service, wholesale and retail trade, and leisure and hospitality categories. When we look at the northern part of the state, we see a somewhat greater concentration of jobs in finance, particularly in Hudson County, in goods distribution, related to the ports, rail lines and trucking and warehousing activities that are prominent here, in pharmaceuticals manufacturing and research and development, and in the private education sector. The area also has important links to New York City. For example, the data centers here in the state serve many of the city’s financial firms.

These conversations will help me to represent all of my constituents in my work at the Fed as I consider how best to manage interest rates and make other monetary policy decisions. Northern New Jersey is important to me not just because it is a large and important part of the New York Fed’s District but also because it is my home. My wife and I have made our home in Cranford – her home town where she can be near her mother. While my colleagues and I are pleased to work with the business community – and I know that Jason Bram and Rae Rosen of the Fed have addressed this group in the past – we also have a number of initiatives specifically targeted to help low- and moderate-income groups, particularly here in Newark. For the past three years we have provided the Newark/Essex County Foreclosure Taskforce with data and analyses on the latest mortgage conditions and trends through a range of outlets including round tables, presentations and newsletters. This Taskforce was formed in response to the rise in foreclosures in Newark and surrounding towns in late 2007. The Taskforce is comprised of representatives of over 40 community development corporations, nonprofit housing counseling and legal service providers, government and community development officials and advocacy organizations working to address this serious issue. Over the past two years we have partnered with Bank on Newark.
The impact was of such magnitude that export receipts in these two industries, which together  1  European Commission. 1993. The Challenge of Enlargement – Opinion on Malta’s Application for membership, document drawn up on the basis of COM (93) 312 final. Bulletin of the European Communities, Supplement 4/93, p. 13. BIS Review 14/2008  1  had accounted for 60% of total exports, dropped by more than 26% between 2000 and 2002. 2 The triggers This cyclical setback was compounded by the economic restructuring induced by globalization and was soon reflected in a rising unemployment rate and large and growing fiscal and current account deficits. On the eve of EU membership, therefore, the authorities were faced with a choice between two strategies. They could either use the fact that Malta had a large fiscal imbalance to maintain the status quo or, at most, adopt a gradualist approach to fiscal consolidation, with the aim of minimising social disruption. This would have implied a delay in implementing much needed measures, with a consequent risk of slippage in the Government’s commitment to reform that would have further undermined growth prospects. Worse still, this option carried the possibility of more painful adjustment at a later stage.

Indeed, between 2000 and 2006 the share of the manufacturing sector in gross value added dropped by 5.5 percentage points, while the share of services other than public administration gained more than 6.5 points to 70%. The composition of the services and manufacturing sectors has also changed. In manufacturing, for example, the share of the two largest sectors dropped from 52% in 2000 to 41% in 2006, suggesting that diversification is underway. Industry has also become leaner and increasingly oriented towards capital intensive activities such as generic pharmaceuticals and biomedicine. In the services sector, aircraft maintenance and repair, aviation engineering, software development, call centres and back office and financial services are gaining ground as are well-established activities such as tourism. This change in Malta’s productive structure reflects a conscious policy of moving away from labour intensive, low-value activities to others that use higher skills and have a potential to  4  According to the 2007 e-rankings of the Economist Intelligence Unit, Malta is the 24th most technologically advanced country in the world. The Economist Intelligence Unit defines ‘e-Readiness’ as the ‘state of play’ of a country’s information and communications technology (ICT) infrastructure and the ability of its consumers, businesses and governments to use ICT to their benefit. Rankings are based on a weighted collection of nearly 100 quantitative and qualitative criteria, organised into six distinct categories measuring the various components of a country’s social, political, economic and technological development. The Intelligent Community Forum (ICF) recognises Malta as one of the Smart21 Communities of 2008.
If we take trends in self-employment, temporary and zero-hours contract workers since 2000, we would expect these to have collectively directly subtracted from wages by around 0.6 per cent, or around 4 basis points from annual wage growth. 18  Again, although these estimates are modest they  probably understate the true effect, given they ignore any behavioural effects of these trends. Wages are not the only way in which these shifts in the nature of work may have affected labour market behaviour. As with unionisation, these shifts may also have widened the dispersion of wage rates within a given sector or occupation, with less collective-bargaining and more localised rates of pay. Vacancies data lend some support to this hypothesis. Charts 9 and 10 plot the distribution of offered wage rates in different occupations, comparing job vacancies containing the terms “self-employment” and “flexible hours” with those that do not. These vacancies data probably capture a particular segment of the self-employed and flexible working population, who differentiate their pay by more than the typical self-employed worker. Indeed, the ‘self-employed’ vacancies here are advertised by firms who invite applicants to become self-employed before hiring them. Nonetheless, these “violin” plots of offered wage distributions play an interesting tune. The distribution of offered wage rates is far wider for vacancies associated with self-employment and flexible hours than those without, within a given occupation. There is far less evidence of a “going-rate” for jobs associated with the self-employed and flexible working. This sounds intuitively plausible.

With further reduction in NPLs and higher interest rates, there are better prospects for banks’ profitability. We see demons of the past in our region today and we wish to avoid any doubting of our European and Transatlantic engagements. In order to go further we must prevent the demons of the past from questioning the virtues of opening our economy to foreign investment. The only way to preserve this fine moment for Romania is to steer and balance the economic growth, to advance on our European path and grasp the benefits of this historical process. I will now give the floor to Mr. Jeffrey Franks who will deliver an in-depth presentation on the first chapter of the report – “Europe Hitting Its Stride”, accompanied by his discussant, Deputy Governor Liviu Voinea. I wish you all a fruitful debate today! 2/2  BIS central bankers' speeches
Such models tend to abstract from the maturity structure of interest rates and the impact of term premia, especially in their commonly used linearised versions. So far, we have seen the typical reaction of the yield curve to rate cuts in normal times: first, a reduction of the policy rate tends to lower and steepen the yield curve as short-term maturities decrease by more than their long-term counterparts; second, in addition to actual rate changes, communication about future rates influences the curve so that intermediate maturities react most strongly; and third, the transmission of  monetary policy action and communication on short rates to long rates not only works through rate expectations but also through term premia. Assessing the impact of non-standard monetary policy on the yield curve The transmission of negative rates to the yield curve Turning to non-standard policy, let me start with negative interest rates. Chart 5 shows the characteristic footprint of a cut in the policy rate – in negative territory – on the yield curve. It is constructed on the basis of high-frequency financial market information in the same way as Chart 3. There is a clear difference: compared with standard rate cuts in positive territory, rate cuts in negative territory have had a stronger effect further out along the yield curve. Chart 5 Estimated effect of policy rate (deposit facility rate) cut in negative territory on the OIS curve (basis points)  Sources: Based on Altavilla et al. (forthcoming).

As of 2016, it is the yield of a 20-year zero coupon bond. For Germany, the series is the rate on a government bond or similar government debt instrument with 5-15 year maturity,  derived from a variety of historical sources by Jordà et al. (2019). As of 1972, it is the ten-year German Bund rate. For the US, the series is the rate on government bonds with around ten-year maturity, provided by Jordà et al. (2019). As of 1960, it is the ten-year government bond rate. The euro area OIS rate is for ten-year maturity. Latest observation: 11 November 2019. Chart 2 Yield curve slope and recessions in the euro area (percentage points)  Sources: CEPR, OECD, ECRI, Bundesbank, Thomson Reuters and ECB calculations. Notes: The slope of the yield curve shown is the spread between ten-year and one-year OIS yields since 1999. Before 1999, the spread is based on German bond data. German data back to 1972 are computed by the Bundesbank using the method of Svensson. German data prior to 1972 are extrapolated backwards based on historical series of short and longterm yields provided by the OECD. Long-term OECD yields refer to yields on outstanding listed federal securities with residual maturities of over nine to ten years traded on the secondary market. Short-term OECD yields are usually either the three-month interbank offered rates applicable to loans between banks, or the rates associated with Treasury bills, certificates of deposit or comparable instruments of three-month maturity in each case.