samchain/econo-pairs-v1 huggingface dataset:
The high level of investment and activity in the oil and gas industry, coupled with the general boom, continues to generate strong growth impulses to the region. Growth is broad-based and there are good prospects of continued growth in the next few months. BIS Review 34/2007  3  A good half of the enterprises report difficulties in accommodating demand growth. This is a little lower than in the previous round. Capacity remains tight in manufacturing supplying the petroleum industry, building and construction and business services. The investment level is expected to rise in all industries. Profitability varies somewhat between sectors. It is solid in the supplier and export industries, retail trade and services, and stable in building and construction and manufacturing supplying the domestic market. Employment has risen in all industries in Hordaland and Rogaland over the past three months. Employment has increased over several years in the business sector. In recent months, employment growth in the public sector has also picked up. Unemployment in the region is now a little lower than 2 per cent, which is lower than the average for Norway as a whole. Unemployment began to fall earlier in this region than in the country as a whole. Demand for labour is expected to increase in manufacturing and services in the next three months. In other industries, employment is expected to be relatively stable. The tight labour market is reflected in continued high wage growth. Capacity utilisation in the Norwegian economy is expected to remain high through 2007.

In some municipalities, the number of vacancies is higher than the number of job-seekers. There are also reports of shortages of other factor inputs. There are shortages of drivers, pre-school teachers, supervisors, engineers, carpenters, architects, auditors, accountants, IT personnel and health workers. It has probably not been since the 1970s that we find such widespread reports of purely physical production constraints, for example now in the form of shortages of rigs and other equipment in the petroleum industry or shortages of plank, concrete, insulation and scaffolding in the construction industry. New national accounts figures show that activity in the Norwegian economy increased at a faster-thanprojected pace in the period 2004 – 2006. The figures also indicate that productivity growth has been higher than expected. We interpret this to mean that the permanent level of production capacity has also increased. An alternative interpretation is that favourable cyclical developments are fuelling productivity growth. If that is the case, it may show a marked decline when economic growth slows. BIS Review 34/2007  1  Unemployment has fallen sharply in the past few quarters. The rate of decline and level of unemployment are reminiscent of two previous cyclical peaks, the one in the mid-1980s and the other that started in the late-1990s and continued into this decade. Both expansions culminated in a sharp rise in wage and cost inflation. Employment growth was for a long period lower than in the cyclical upturns in the 1980s and 1990s.
In order to distinguish between the parts of this story that provide lessons that are applicable to the rest of the world and those that do not, we need to get some of the facts straight, because to this day there are still several misconceptions floating around about what was done in Iceland during the crisis. The collapse of Iceland’s three cross-border banks in early October 2008 was the most noticeable event in the unfolding of the financial crisis. The combined balance sheet of these banks was 10 times Iceland’s GDP (see Figure 1), and their combined bankruptcy, measured in terms of balance sheets, ranks second in size in the international history of corporate failures, only after Lehman Brothers. And this happened in a country that ranks among the smallest in the world! We are still dealing with the complications that this entails, as can be seen in our overblown and unbalanced IIP and the controls on capital outflows. Figure 1  Source: Central Bank of Iceland. BIS central bankers’ speeches  1  Before the collapse, the banking system had expanded very rapidly, growing in just five years from a combined balance sheet of less than 2 times GDP at the end of 2003 (see Figure 1). Most of this expansion was cross-border, and a significant part of it was actually off-border, having very little to do with Iceland, as both financing and investment took place abroad. Around two-thirds of the balance sheet of the three cross-border banks was denominated in foreign currency.

Be that as it may, the direct fiscal costs of capital injections into domestic banks, losses on government guarantees, the blanket guarantee of domestic deposits, and the refinancing of the Central Bank are estimated to have amounted to onethird of year-2010 GDP. The net might turn out to be somewhat lower, however; for instance, there will be some recovery on the collateral of CB lending to failed banks. Gross government debt went from under a third of GDP before the crisis to a peak of one GDP, and net debt rose from around a tenth to two-thirds. As a result, there was no fiscal space to save banks 10 times GDP, and attempting to do so would have bankrupted the country. Indeed, Iceland had to embark on a medium-term fiscal consolidation programme even as output was still contracting, in order to stop government debt from reaching an unsustainable level and to rebuild the external confidence needed for the sovereign to regain market access. The overall fiscal effort (measured by changes in the cyclically adjusted primary balance as a percentage of potential GDP) amounted to 10 percentage points 2010–13, more than that of Ireland during the same period (although Ireland will overtake Iceland if the expected effort for 2014 and 15 is added).
Bank lending represented around 80% of capital flows to emerging markets during the 1970s. But by the end of the 1990s, FDI accounted for around 80% of emerging market capital flows, with portfolio equity accounting for much of the remainder. As Ken Rogoff, the new Economic Counsellor to the IMF, pointed out in 1999 there are still several biases towards debt rather than equity finance in capital flows to emerging markets. One of these is deposit insurance in both creditor and debtor countries which makes it more difficult for the authorities to avoid being seen as providing some implicit support to international loans by domestic banks. There is no easy answer to this problem, but a shared concern in both borrowing and lending countries is the implicit insurance which both sides are giving to large parts of the financial system. The moral hazard so created is not restricted to international lending, but it does affect the incentives for the form of investment in emerging markets. We need also to guard against institutional or regulatory mechanisms – both international and domestic – which favour  4  BIS Review 71/2001  short-term over longer-maturity capital flows. In the long run, the solution is for emerging markets to create legal structures and a stable economic policy environment that provide the confidence to support inward equity investment in their economies. 5. Finally, greater transparency allows better informed decisions by both borrowers and lenders, and reduces the risk of contagion by allowing markets to differentiate among borrowers.

Deposit and credit growth of the banking sector continued, with revival in the lending to the corporate sector, accompanied with a decline of the NPL ratio in the first quarter of 2018 to 5.1%, due to claims collection. Current account deficit in 2017 additionally reduced to 1.3% of GDP, reflecting the positive contribution of the foreign capital companies on the export side, which indicates further strengthening of the economic fundamentals. Regarding the recommendation from the last year’s dialogue, the central bank prepared draft strategies for NPLs management and strengthening the use of local currency, both agreed 1/2  BIS central bankers' speeches  with the Ministry of Finance and currently subject to consultation with other relevant stakeholders. In both areas, as already being confirmed in the assessments and final conclusions, we have already achieved tangible results; however the adoption of these comprehensive strategies will put in place additional mechanisms to deal with these issues. In light of the challenging time that we have faced in recent years, we need to point to the maintenance of price and financial stability as important pillars of the macroeconomic stability, as well as the need to continue strengthening the fundamentals and resilience of the economy. Implementation of structural reforms and strengthening institutional capacities, including sound public finances, should remain main priorities for faster income convergence and EU integration. Thank you! 2/2  BIS central bankers' speeches
What was once something that was inhibiting her business line is now something that is helping her protect it. She may find that compliance as a constructive and independent partner can offer ways to avoid problems . Greater clarity about roles is a good starting point. Here are some additional ways in which compliance may strengthen its influence while preserving its independence. First, compliance should insist on getting involved earlier. Influence delayed is influence denied. If a firm is considering restructuring a unit or designing a new product, compliance should be at the drafting table with an opportunity to hear and to be heard. If a new trading strategy is to be implemented, compliance should review sooner than on the eve of execution. I understand that time is money, but investing time early in a compliance review may save years of investigation later. Second, compliance should keep an eye out for larger, more systemic compliance risks and issues. As a centralized function, compliance is well-situated to connect the dots and identify broad issues that are not always visible to management. The compliance function typically serves the entire organization, and can use that enterprise-wide view to spot systemic problems. 3/6  BIS central bankers' speeches  One type of systemic compliance risk that I think about is what Gillian Tett of the Financial Times has called The Silo Effect. Silos can result from the specialization common in hierarchical organizations working in highly technical fields. Silos are at risk of breaking away from the main.

When employers recommend that their employees “opt in” to retirement plans, they achieve a far lower rate of participation than when employees are automatically enrolled, but may “opt out.” What accounts for this? The economics of the plan work either way. And the incentives have not changed. Employees are not promised more money if they choose not to “opt out” than if they choose to “opt in.” But a better result is achieved by “nudging” employees simply by changing the starting point.2 Compliance programs may be more likely to achieve their desired effects if they are based on studies of how people actually behave. Here are three ideas that would benefit from continued empirical study. 1/6  BIS central bankers' speeches  First, can we increase participation in voluntary training and education programs by prepopulating enrollment? That is, can we rely on the same type of inertia that keeps employees from opting out of retirement savings programs? I’m speaking here of programs above and beyond the minimum training firms already require. These might explore in greater depth the ethical decisions that come up in corporate life—in particular, times when the corporation’s interest and a client’s interest appear to diverge. Second, I am interested in the potential for certain employees to serve as carriers for social norms. Their identification is not always based on rank in a corporate hierarchy. Step one is to find out who these people are. We might, for example, attempt to map electronic communication within an organization.
The same applied to direct regulation of financial enterprises. Other considerations, than returns and risk, took precedence in connection with the provision of credit and capital movements. At the end of the 1970s, direct controls were gradually removed. As a result of the emergence of new financial instruments, the controls no longer had the same effect. There was a growing realisation that the existing controls had a negative effect on the allocation of credit and capital, and hence on longterm economic growth. Cross-border capital movements were gradually liberalised. It was not until the 1990s that capital was able to move between countries as freely as before 1914. Because of the serious effects of financial crises, the financial industry is subject to many regulations and to extensive supervision. The industry is by no means deregulated, but the regulations are now designed to make markets function more securely and more efficiently. Clear requirements have been established for both capital adequacy and liquidity. Nevertheless, the regulations do not eliminate the possibility of financial crises. Are financial crises an inherent feature of today’s system? 7  The transition to a market-based system has increased the scope for financial cycles. The cycles may be amplified by unrestricted cross-border capital flows. Because of the central role of the financial industry as a credit and capital intermediary, this can also influence macroeconomic developments. At worst, an upswing in the economy can be amplified through the build-up of financial imbalances, which may trigger and reinforce a downturn and financial crisis.

This also means that we must factor in risk. This applies to banks in their internal credit routines, and others with interests in banks – shareholders, lenders, bondholders and depositors. Market participants must understand that equity, subordinated loan capital and other claims on banks not covered by deposit guarantees may be lost. The financial industry must therefore be forward-looking. Buffers must be built up in periods of expansion when losses are low and profitability is high. The financial safety net must be reassessed if it is so favourable that banks and market participants are not encouraged to exercise market discipline. For example, deposit guarantees in Norway cover larger amounts than in many other countries. Despite the lessons that both the authorities and the financial industry have learned from financial crises, such crises may nevertheless occur in the future. Experience indicates that crises are often a result of inherent processes in the financial system. There is still reason to hope that the authorities through their policies and formulation of rules and the financial industry through its management of risk will reduce the frequency of financial crises. Thank you for your attention. 10  BIS Review 86/2001
This is consistent with the research results; over very long periods of time, real exchange rates appear to “level off” and not show any special trend. In the very long run the theory of relative purchasing power parity thus appears to apply. 23 If the real exchange rate does not have any trend, it will return to its average in the long run. There are thus results in the academic research indicating that real exchange rates fulfil relative purchasing power parity in the very long run. 24 However, these results have little value for those trying to forecast exchange rate developments in the short and medium term. As I mentioned earlier, it is moreover the trade-weighted krona exchange rate that the Riksbank tries to forecast. Figure 5 showed only the development of the krona against the dollar. If we return to Figure 4, we can see that the real trade-weighted krona rate shows  22  Interestingly, there is research indicating that price differences for a Big Mac between countries even out over time in accordance with relative purchasing power parity. See, for example, Cumby (1996) and Parsley and Wei (2007). 23  See, for example, Froot and Rogoff (1995) and Rogoff (1996) for a scientific survey of the research into purchasing power parity. 24  See, for example, Taylor (2002)  10  BIS Review 3/2010  large variations over fairly long periods. 25 The krona is much weaker in real terms at the end of the period than at the beginning of the period.

From the perspective of the National Bank, this means that the Government is trying to anticipate the policies that we implement to maintain the level of the exchange rate and it takes them into consideration when adopting the budget. It is clear that the National Bank and the Government may adopt essentially good decisions in their respective spheres of action if they cooperate even during the discussions which precede the decisions. The cooperation with the Government would also be in terms of creating conditions for the social dialogue to take into account the challenge we face in conducting the monetary policy. This actually means that the inflationary pressures which in themselves would result in faster development of the domestic economy, as well as more positive output gap compared with the countries of the Eurozone, would also lead to more pronounced interaction with the increase in unit labor costs. The perception of close coordination between the Central Bank and the Government in dealing with this challenge would mean that both public institutions are aware of the need to adjust to the conditions that the maintenance of price stability through the exchange rate brings. This adjustment would prompt the Government, through dialogue with social partners, to advocate a moderate growth of wages, i.e. wage growth which will take into account productivity in both the tradable and non-tradable sectors. This would lead to increased employment, while simultaneously improving the competitive position of enterprises, which would alleviate the emergence of imbalances in the economy as a whole.
In view of the harmful long-term effects of expansionary and stop-and-go fiscal policies, the degree of discretion of fiscal policy-makers had to be limited and clear yardsticks for responsible policy choices had to be provided (see Lucas, 1980). Europe’s solution was the Stability and Growth Pact, a rules-based fiscal policy framework binding all Member States and which is essential for the orientation and coordination of national fiscal policies towards sound and sustainable public finances. However, the notion of “the law as the guardian of economic wisdom” (Herdegen, 1998) is widespread: the fiscal responsibility laws in New Zealand, the constitutional obligations to produce balanced budgets in all US Federal States (except Vermont), or the “Golden Rule” of the German Basic Law which prohibits the government from borrowing more than it spends on investment, are all based on this reasoning. It is the same reasoning that led Odysseus to have himself tied to the mast of his ship in order to achieve his long-term primary objective to return home and effectively avoid the temptations of the sirens songs and the potential short-term benefits but also long-term risks they entailed. VII. Concluding remarks  I have covered a lot of ground and I should not further test your patience. But the topic of my presentation involved a variety of issues and policy dimensions. The relationships between economic performance, market structures, economic institutions and social values are complex and characterised by a multitude of direct and indirect interlinkages.

Thus, the aim of maintaining the inflation target is not just about low and stable inflation being a good thing in itself, it also provides a means of ensuring that the policy rate can be used as a monetary policy tool. It is worth noting that this has implications for the argument that the central bank should not bother with inflation at all, but should focus on other things, such as solely balancing economic activity or dampening financial cycles. Doing this effectively requires using the interest rate and to use the interest rate we must have some average inflation. It may also be worth noting that there is an international debate that emphasises that as the neutral interest rate is historically low, even an inflation target of 2 per cent provides too little scope for monetary policy. The target, it is argued, should therefore be higher.9 I do not intend to bring up this debate now, but focus on  7 It is worth noting that it is not only the policy rate that is limited by a lower bound, the same applies to long-  term interest rates. Quantitative easing, which aims to lower longer-term interest rates thus also becomes less effective in an environment with very low inflation, see Gagnon and Collins (2019). 8 See, for example, Broadbent (2015). 9 See, for example, Blanchard, Dell’Ariccia, and Mauro (2013), Ball (2014), Krugman (2014), Rosengren (2015) and Gagnon and Collins (2019).
For now, though, our principal task is to address the challenges of the present. The Federal Reserve Act gives us broad authority to act in response to these types of conditions. We will continue to examine ways to adapt our instruments as market conditions evolve. We will do so in close cooperation with other central banks, as indeed we have since August. And we will do so in the tradition of pragmatism and flexibility that has been one of the defining features of the central bank of the United States. Thank you. BIS Review 149/2007  3

The role of economic policy The third engine of growth in the world economy at present is the stimulus provided by a range of policy measures. Economic policies have played a role in stabilising world economic and financial conditions in three ways: first, by direct interventions to underpin the stability of banks and the financial system more generally in many economies; second, through stimulatory fiscal policies; and third, through supportive monetary policies – very low interest rates and direct injections of money to support demand in a low interest rate climate, such as the MPC’s policy of “Quantitative Easing”. However, the current level of stimulus from monetary and fiscal policy was designed to turn around economies in the wake of the traumas we experienced 12–18 months ago. As confidence builds and private spending recovers, it is likely to be appropriate to gradually withdraw at least some of this policy support for demand, without jeopardising growth prospects. The need to re-adjust economic policy is most obvious on the fiscal side, where deficits are very high by historical standards, particularly in the US, Europe and Japan – as Chart 7 shows. These large deficits reflect the important role that public spending and tax policies have played worldwide in stabilising economic conditions during the recession. But to ensure sustainable public finances over the medium-term, these budget gaps will need to be closed over the recovery.