samchain/econo-pairs-v1 huggingface dataset:
Making this translation in the loss function, we see that the conservative central banker attempts to minimize the equally weighted sum of squared inflation and unemployment deviations: L = (π – π*)2 + 1 * (u – u*)2 where u and u* are the actual and natural rates of unemployment6 The bottom line is that a conservative and tough-minded central banker can still value deviations in unemployment from the natural rate equally with deviations in inflation from its target. Accordingly, an inflation rate of 5% against an inflation goal of 2% presents this  3  Taylor, John B. 1979. “Estimation and Control of a Macroeconomic Model with Rational Expectations,” Econometrica 47 (5) September, pp. 1267–1286. 4  For example, Woodford, Michael, 2005. “Central-Bank Communication and Policy Effectiveness,” Paper presented at Federal Reserve Bank of Kansas City Symposium on “The Greenspan Era: Lessons for the Future,” Jackson Hole, Wyoming, August 25–27, 2005. Available at: http://www.columbia.edu/~mw2230/JHole05.pdf  5  Rogoff, Kenneth S. 1985. “The Optimal Degree of Commitment to an Intermediate Monetary Target,” Quarterly Journal of Economics 100 November, pp. 1169–1189. 6  That is, Okuns’ Law says (y – y*) = 2*(u – u*), where u and u* are the actual and natural rates of unemployment. Making this translation in the loss function (so squaring and multiplying by ? = ¼ yields L = (? – ? *)2 + 1 * (u – u*)2.

First, the government has shown little ability and willingness to impose clear and ambitious return requirements and control the financial risk in companies where it has a dominant stake. In addition, if the companies are underperforming, both jobs and regions will be adversely affected. Second, the government has not developed effective management of equity in the companies. The size of equity and the dividend policy seem to be randomly determined by historical factors. New equity management instruments, such as share buy-backs and extraordinary dividends, are seldom used. On the whole, it seems difficult for a state-owned enterprise and for the state as owner to acknowledge that a growth period may have come to an end and that the owners should invest their capital elsewhere. Third, the state as owner will always have a strong aversion to negative corporate events. On the other hand, the state will provide little extra rewards to a company that has boosted its return on equity by one or two percentage points. The result is an erosion of an important driving force behind growth. BIS Review 14/2001  11  In a state-owned enterprise the board or management of the company and the state as owner may have a common interest in overcapitalising the company because they will then both be on the safe side. Fourth, the state has complex and elaborate procedures for making decisions. Moreover, the procedures are designed to accommodate tasks other than the role of ownership.
On the other hand, long term interest rates are on the rise in industrial economies, mainly reflecting increased real rates rather than an increase in inflation expectation or of duration premiums. The increases in long-term interest rates may be indicating better growth prospects in the U.S. now that a soft landing is more likely. However, overall global financial conditions are very accommodating, with risks premium that, although beginning to rise, are very close to their record lows. This, despite the flight to quality phenomenon observed in the past several weeks as a result of perceived risk increase because of the market status of low-quality mortgage loans in the U.S. In any case, the levels of market volatility in emerging economies are significantly smaller than they have been in earlier episodes. The dollar has depreciated against the currencies of industrial economies, responding to the evolution of the business cycle. In the past few days, this has been aggravated by concern about how the U.S. housing market situation will unfold. The Chilean peso, similarly to currencies in the rest of emerging economies, has also appreciated against the U.S. dollar due to weakness of the latter. Exporting or import-substituting sectors that are selling their produce at a dollar price not too different from the price they were getting towards the end of 2001, have possibly endured a large loss of profitability. This is directly associated with the multilateral depreciation of somewhat more than 40% suffered by the dollar in the world since then.

On the demand side, private consumption remains strong, growing more than 7% per annum in the first quarter of this year. Consumption is backed by the sustained growth in salaried employment and good financial conditions. But the main change has been the recovery of fixed capital investment which went from an average increase of 2.4% during the last three quarters of 2006, to a solid 7.9% in the first quarter of this year. Behind this strong investment are good corporate profits and favorable credit conditions, the progressive exhaustion of output gaps and good prospects for growth. In addition, exports of goods and services have strengthened, going from average growth of 3.8% in the last three quarters of 2006, to an average around 10% in the first quarter of 2007. Recent fuel price hikes begun in January have acted as a brake to the expansion of private consumption, through their effect on households’ disposable income. The renewed strength of output has also contributed to a remarkable improvement in the labor market, with significant job creation and reduction in the seasonally-adjusted rate of unemployment. From a longer perspective, in the past 13 quarters GDP has grown at an average annualized quarterly rate of 6%, considerably above trend GDP growth. Over the same period, the seasonally-adjusted rate of unemployment went down from 9.5% in 2003 to only 6.8% in the quarter ending last May.
And if the flow of foreign capital were to dry up or even reverse, there would be wider consequences for spending, output and exchange rates. So your continued success is important to everyone. And yet, as you know all too well, the UK’s commercial property market hardly has a record as a beacon of stability. But we shouldn’t be fatalistic. We’re not doomed to repeat the past. Yes, the cycle is a force of human nature. But resilience to it can be nurtured. It will be a battle of nurture against human nature. The time to start it is when people most feel like celebrating: when your market is on the up. We have to start now. And if we’re going to have any success, we – the Bank of England, you – the industry, and us – together, need to step up and act. So this evening I want to set out what is being done. At the heart of it is the need to ensure finance supports you through the whole cycle. The need to avoid the pattern – all too familiar to you – of financing conditions going from conservative to careless and then to completely closed, all too rapidly. BIS central bankers’ speeches  1  The need to replace financing that magnifies cycles of sentiment with financing that mutes them.

The old belief was based on the notion that a central bank would measure the success of its actions by the extent to which economic activity could be raised and maintained above potential. If rational individuals already expect a certain change, they adjust their behaviour to that expectation. And that means that a monetary policy change would have no effect. In the past fifteen years, however, two important developments changed the theory and practice of central banking. First, the assumption that successful monetary policy acts by surprises and is made by a sequence of isolated steps has been the subject of thorough theoretical scrutiny and is now close to oblivion. It became clear that policy-making by surprises and isolated steps will bear no lasting effect on the economy once the public recognises the intentions that motivate the monetary authority. A monetary policy strategy made of isolated actions with the intention of boosting output above potential is bound to lose effectiveness because the short-term inflationary impact of that policy soon becomes embedded in price and wage expectations. Output and employment react in the very short-run, but in the medium term the economy suffers from a permanently higher inflation. The drive toward central bank independence provided an additional encouragement for transparency. Today an overwhelming majority of central banks across the globe is independent. The political and functional independence of central banks has been an important milestone in the way towards separating the authority to tax and spend from the power to control credit conditions.
This is a strengthening compared to the earlier agreement among the euro area countries, changing the requirement from targeting the cyclically adjusted deficit to targeting an improvement in the structural deficit. When deciding the adjustment path, public investment and structural reforms can be taken into account. If structural reforms are to be taken into account, they should have a large and proven positive effect on the economy and there should be a safety margin to the 3% deficit floor. My view is that there is a possibility to use the newly defined MTOs in a wise manner, more closely adapted to the situation of the individual country. However, the scope for interpretation is so large that there is a high risk of lax and uneven implementation. The experiences of the first year indicate that some member states have more ambitious MTOs than required by the Pact. This is often countries with their own national budgetary rules, such as Sweden, which comprise MTOs. At the same time,  2  BIS Review 88/2006  there are other member states who need to do more to achieve their MTOs. The measures are often postponed too far ahead and are not sufficiently explicit and concrete. Changes in the corrective arm The third part of the changes refers to what happens when a country has an excessive deficit. As before, exemptions can be granted if the country is suffering from a severe economic downturn that it could not foresee, so called exceptional circumstances.

It is therefore no small task to determine how to implement these purchases in an effective and responsible manner. That task falls to the Open Market Trading Desk (the Desk) at the  1  The phrase “disappointingly slow” was used in the November FOMC statement. 2  This point has been noted by Chairman Bernanke on several occasions. For example, see his remarks at the European Central Bank on November 19, 2010. BIS central bankers’ speeches  1  Federal Reserve Bank of New York. Let me describe how the Desk has conducted those purchases and some of the issues that we have taken into consideration during the process. Implementing Treasury purchase operations A good place to start is with the distinction between the roles of the FOMC and the Desk. The FOMC is responsible for making monetary policy decisions, while the Desk is responsible for implementing those policy actions on behalf of the FOMC. Thus, decisions about the broad parameters of any asset purchase program, including the amount of securities to be purchased and the duration of those securities, reside with the FOMC, as those are the parameters that will govern the overall impact on financial conditions and, ultimately, on the economy. The role of the Desk is to determine how best to carry out the purchase programs within those broad parameters. In doing so, the Desk seeks to meet the policy intentions of the FOMC, while taking into consideration two other objectives.
Ravi Menon: MAS’ Annual Report 2013/14 – economic overview and challenges Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at MAS’ Annual Report 2013/14 Press Conference, Singapore, 24 July 2014. *  *  *  1 Good morning. Welcome to MAS’ annual report press conference. 2 I will touch on four broad areas today. First, growth and inflation, including asset prices; second, our regulatory measures to safeguard the interests of consumers of financial products; third, the growth of the financial sector and fourth, an overview of MAS’ financial results. 3 Let me start with the economy. Momentum slows but economy on track to meet 2–4% growth forecast 4 The economy grew an average of 0.4% on q-o-q seasonally adjusted, annualised (SAAR) basis over the first two quarters. Export-oriented sectors were sluggish in the first quarter due to the slippage of final demand in the US and China. In the second quarter, there was modest improvement in trade-related services – wholesale trade and transport and storage sectors. But electronics production remained weak. 5 Looking ahead for the year, the economy remains on track to grow at 2–4%. The economy has already averaged 3.4% growth in the first half on a year-on-year basis. More importantly, sequential quarter-on-quarter growth should see a modest pick-up in the second half even if there is some drag to year-o-year growth due to the high base in the second half of last year.

This reflects our conservative investment strategy, which balances the need to hold sufficient liquidity to support the conduct of monetary policy with the aim to preserve the international purchasing power of the foreign reserves. MAS’ portfolio is well-diversified with a risk profile that is commensurate with our role as a central bank. 62 I will stop here, and will be happy to take your questions. BIS central bankers’ speeches  7
Without that sense of group interest, we could not have cut employer CPF rates, nor restored our competitiveness in a way that few other countries could do. This collective response continues to be critical. In our current remaking, the key changes are in our mindsets, and the main driver of change is private initiative and enterprise. To succeed, the change must come from the people themselves. In this process, the government can only play an encouraging and facilitating role. The additional challenge for us is that this time, the motivation for remaking ourselves is less obvious. Previously we were catching up from behind, but now we are at developed country standards of living. Why do we need to sacrifice what we already enjoy? Yet if we do not accept the sacrifices and change, not only will we not make progress, but we will even likely lose what we already have. No union leader who has visited Shanghai doubts this. It is the reality that we must get home to every Singaporean. Social consensus and political will Fourth, reform and restructuring is never a purely economic exercise. Success depends critically on social and political factors. Economic reforms are not painless. There will be winners and losers, at least in the short-term. Therefore there must be political support for the changes, a willingness to accept the pain of the transition, and a confidence that those adversely affected will be helped. This depends on a feeling of shared nationhood, of going through thick and thin together.

The experience of Japan and Germany over the last decade shows how difficult and painful this process can be, even in wealthy, advanced countries. What more for a small and vulnerable economy like Singapore? Over the past three decades, we have built up significant strengths that will stand us in good stead for the challenges ahead. We have weathered many shocks since independence - regional recession in the mid-1980s, and most recently, the Asian financial crisis and global electronics downturn. Each test has made us stronger. We must now rise up to the latest challenge, and by remaking our economy, lay the basis for many more years of progress and prosperity for Singapore. BIS Review 19/2003  7
However, this indicator disregards the fact that Swedish rent control means that rents are much lower than the corresponding market rents. Most indications are that house prices are compatible with the high demand and modest supply. In Sweden, there is no “buy to let”, only “buy to live”. Homes are primarily bought to live in, rather than as objects for investment or speculation. Moreover, households have strong balance sheets. When it comes to assessing possible vulnerabilities, the levels of the balance sheet are more important than the flows. A lot of fuss is made of household debt now being around 165 per cent of households’ disposable income and increasing (see Figure 1). But at the same time, household wealth is about 500 per cent of their disposable income. Moreover, the debt share of the assets remains stable over time. The average household thus has debts equivalent to only one-third of its assets, while its equity is equivalent to two-thirds of its assets. This low leverage and high equity implies a large buffer against a fall in house prices. According to the report of Finansinspektionen (2010) (the Swedish Financial Supervisory Authority), borrowers who have new mortgages and thus the largest ones, are not particularly vulnerable and can manage extreme stress tests with higher unemployment and large falls in house prices. In general, these borrowers’ debt-servicing ability is very good, even when mortgage rates are much higher.

At the time of IMF’s establishment, our economic policy advice focused mainly on helping members to shape sound macroeconomic and financial policies, within the disciplines of the Bretton Woods system of fixed exchange rates. The breakdown of that system in the early 1970s, and the resultant Second Amendment of the IMF’s Articles of Agreement, led to a re-orientation of the IMF’s functions. In particular, the revision of Article IV, and the introduction of the surveillance process, explicitly recognized the close relationship between domestic economic policies and international stability. To this day, this forms the basis for our systematic and comprehensive review of economic conditions and policies in each member country. Similarly, the wave of de-colonization that swept the world from the 1950s onwards placed new and complex responsibilities on the Fund. The IMF quickly found that countries looked to it for advice and assistance beyond the traditional macroeconomic areas of fiscal policy, monetary policy, and exchange rate systems. In addition to these subjects, IMF advice and assistance were also sought on establishing the institutions of monetary and fiscal policy, and on supply-side structural policies to help promote sustained growth. In the last fifteen years, following the end of the Cold War, new challenges were created in this regard by the transition of former centrally-planned economies to market-based systems. Through our work in these areas, it also became increasingly clear that structural and institutional issues were important for stability and growth in other member countries too, including the major industrial economies.
Notably, this includes the formation of a dedicated platform with the Securities Commission and other stakeholders to streamline measures for development of the national alternative finance ecosystem. Additionally, initiatives such as the deployment of Dana Penjana under Penjana Kapital, a 1-to-1 matching program for funds raised by venture capitals, are important public private partnerships utilising alternative finance to spur early-stage innovation. The investee companies here today, involved in a variety of innovative fields across finance, are testament to this. Beyond regulator or government-led efforts, capital market intermediaries – such as asset managers and large institutional investors – can also play a critical role in mobilising capital more actively to firms, especially SMEs and start-ups. For now, a large proportion of venture capitalbacked deals in Malaysia remains facilitated by the public sector entities. There is considerable room to increase private sector involvement here. Another potential avenue for unlocking investor funds could be through greater Corporate Venture Capital (CVC) participation in VC funding activities. By investing in the VC firm, as opposed to the start-up itself, the technical know-how in start-up investing could be built up over time, without the instance of crowding-out VCs through direct competition in deal flow. Closing Let me conclude. The Digital Era is already upon us. In the next few years we will see more advancements and some of this, are unknown to us today. Some of you as industry entrepreneurs have a better vision on this.

EU Member States should also make swift progress towards an agreement to create a common European procedure for the administrative winding-up of credit institutions. This procedure would benefit from the instruments developed for the resolution of credit institutions, aiming to maximise the realisable value of the financial assets that make up the bulk of banks’ balance sheets. In Spain, recent experience has shown how inefficient the existing insolvency proceedings for credit institutions are in terms both of timelines and recovery in value. It would, therefore, be desirable for progress to be made in determining an administrative mechanism for winding up credit institutions that maximises the preservation of value and reduces both the timelines and the costs of the existing insolvency proceedings. Conclusion To sum up, our duty, as economic and supervisory authorities, is to continue our close monitoring of financial institutions and markets, to ensure that they continue to provide the necessary flow of credit to the economy, and of financial stability risks stemming from this crisis. We must continue to adopt measures to mitigate those risks and, naturally, stand ready to provide an appropriate European response should such risks materialise. Thank you for your attention. 10