samchain/econo-pairs-v1 huggingface dataset:
Although I cannot quote all contributors, Bruegel has also promoted a European fiscal capacity and a stronger coordination of economic policies, along with Jean Pisany Ferry and many others. 5 Last year, the Five Presidents Report, followed by the EMU pack of the European Commission reflected a more consensual view of how to deepen and strengthen EMU in four different areas: financial, fiscal, economic, and political – and with two different horizons, the short term and the long term, recognising that the latter may require a revision of the Treaty. How to reform the Euro Area(EA)’s economic governance is the subject of a loaded but much-needed debate requiring some principled choices (I). Among the latter, I will elaborate on the priority towards a “full coordination” of national economic policies, and the subsequent need for a strong EA Finance Minister with very concrete tasks I will detail today (II). I. The loaded debate we must have and some fundamental principled choices. A. The debate is loaded because of at least three fault lines. First, in the relationship between the EA and the rest of the EU, deepening integration across both perimeters at the same time, let alone at the same pace, is not warranted. This raises the prospect of a multi-speed Europe, especially at a time when EU membership could become a reversible matter. We shouldn’t fear different speeds.

6  Jan in’t Veld, Fiscal consolidations and spillovers in the Euro area periphery and core, European Commission Economic Paper 506, October 2013. 7  Dawn Holland and Jonathan Portes, Self Defeating Austerity, National Institute Economic Review No. 222 October 2012. 4  BIS central bankers’ speeches  I could elaborate on the financial dimension of EMU. The Banking Union, when completed, has the potential to move up to the highest level of institutional integration. Similarly, the Juncker Plan is a useful integrated instrument, although too weak and slow at present. I have stressed elsewhere the need for and the benefits of moving ahead with a much stronger “Financing and Investment Union”, incorporating these steps forward and going well beyond the proposed Capital Markets Union. Yet, today I prefer to focus on the fiscal and structural policy dimensions of EMU. In practice, our fiscal framework has been implemented as a fairly weak monitoring framework. Likewise, on the structural front, the MIP (Macroeconomic Imbalance Procedure) is clearly lacking teeth. An institution is clearly missing to develop a mandatory and, hence, full coordination of national policies in the fiscal and structural areas, an idea I will elaborate upon in a few moments. The highly political nature of the debate should not hide the strong economic rationale for such a reform. 15 years ago Peter Kenen 8 argued that a fiscal integration could make currency areas thrive, even though they did not meet all the features of an optimal currency area.
High income growth and a sharp rise in the number of households laid the basis for a sharp, long-term rise in house prices. Self-reinforcing mechanisms were also at work, generating an atmosphere approaching euphoria. People hurried to buy dwellings in order to take advantage of the rise in value. It now appears that the housing market is cooling after an almost three-fold rise in prices in real terms in the course of the past 14 years. House price inflation has been accompanied by strong growth in household debt. Household debt in Norway is now about twice the level of disposable income, making the debt-income ratio higher than ever. At the same time, saving is declining and now seems to be negative. This means that in addition to fully financing their housing investments through mortgages, households are also raising loans to finance current consumption. As I mentioned earlier, the favourable developments in the Norwegian economy of the past few years are primarily due to supply-side changes. A flexible inflation target for monetary policy – as in Norway and a number of other countries – provides a sound basis for coping with the shocks to our economy that have occurred in recent years. The aim of preventing  1  See Elisabeth Fevang og Knut Røed (2006): ”Veien til uføretrygd i Norge” (The road to disability pensions in Norway), Report No. 10 2006, Ragnar Frisch Centre for Economic Research. Norwegian only.

There are many self-regulating mechanisms in the economy, but inflation does not regulate itself. The inflation target of 2.5 per cent also provides a framework for the social partners. Over time, nominal wage growth above 2.5 per cent will entail higher real wages and higher purchasing power. Real wage growth that exceeds productivity growth may lead to higher inflation and higher interest rates. In government-financed enterprises, which are often labour-intensive, budgets are adapted to expected wage growth. This is usually in line with assumptions about cost inflation in the economy as a whole and with the inflation target. If wages rise more than this, efficiency must be increased in order to minimise the adverse impact on service production and customers. 2  Calmfors and Driffill (1988): “Bargaining structure, corporatism and macroeconomic performance”, in Economic Policy, April, 14-61 and Driffill (2006): “The Centralization of Wage Bargaining Revisited. What have we learned?” in Journal of Common Market Studies, Vol. 44, no. 4, November, 731-756. BIS Review 122/2007  3  All economic agents can plan ahead on the assumption that inflation will be about 2.5 per cent over time. This is the most valuable contribution Norges Bank can provide the social partners and other economic agents. Thank you for your attention. 4  BIS Review 122/2007  BIS Review 122/2007  5  6  BIS Review 122/2007  BIS Review 122/2007  7  8  BIS Review 122/2007
We are actually birds of a feather in that we are simply trying to figure out the proper way to conduct monetary policy in order to live up to our dual mandate. Each of us does our utmost to craft monetary policy so as to engender restoration of full employment in the context of price stability. A word about price stability. At the Dallas Fed, we look at prices through a different lens than others. We are of the strong opinion that Jim Dolmas’ trimmed mean analysis of personal consumption expenditures (PCE) – an analytical survey of 178 items in the consumer basket that we have tracked in a constantly updated series dating to 1977 – provides the best insight into prices impacting consumers and the likely path of prices going forward. The Dallas Trimmed Mean PCE recorded an annualized rate of 2.4 percent in July, up from a more moderate 1.4 percent in June. Looking over the six-month horizon – which averages out some of the month-to-month wiggles – the trimmed mean is up precisely 2 percent on an annualized basis. Over the same six months, the headline PCE index is up 3.1 percent, owing to sharp increases in the prices of gasoline and, to a lesser but not unimportant extent, food. Barring further surges in those components, we would expect the headline rate to gravitate toward the trimmed mean rate of 2 percent over the coming months. We shall see.

The 1.1 percentage-point gap we’ve seen between Texas and national job growth over the current recovery corresponds almost exactly to the long-run (40-year) historical gap between our growth rate and the nation’s. The shortfall in jobs at the national level is but one indicator of the pervasive anguish of American households since the Panic of 2008. Another sign of that anguish is that average real per capita net worth in the United States has not regained the losses incurred in the latter part of the last decade. At the end of the first quarter of 2011, average per capita net worth was nearly 14 percent below the peak seen four years earlier. Real income has not fared as badly, but per capita salary income is, nevertheless, almost 2 percent below its peak in the first quarter of 2008. A likely widening of income dispersion over the period, however, suggests that median income has probably fared worse. We will get a better read on this when the Federal Reserve Board completes it triennial Survey of Consumer Finances early next year. I do not expect that survey to paint a pretty picture. I am most aware, as are many of you, that if history is any guide, getting back to where we were will be no small task. The 2008–09 recession was precipitated by a banking crisis.
2  BIS central bankers’ speeches  These reforms will impose higher costs on systemic institutions compared to their nonsystemic (smaller) peers. The logic makes perfect sense when one considers each reform separately, since the objective is to eliminate/compensate the competitive advantage that these institutions derive from expectations of public support. However, the result of adding up all measures may be to turn a gross competitive advantage into a net competitive disadvantage. Although one might see this as a welcomed outcome, I see at least two reasons that could mitigate this view: •  First, this cumulative regulatory cost could lead banks to operate below the economically optimal scale and scope, and withdraw from the provision of activities important for international firms and globalized financial markets. I have no preference for big systemic banks. But I simply do not believe that these large financial institutions became large and complex simply to benefit from the implicit subsidy. •  Alternatively, this could lead to even more concentration among systemic institutions themselves, as some attempt to secure higher public support probabilities to compensate for the higher regulatory burden. Unless public authorities suddenly find a way to credibly commit to no bailouts whatsoever, we may well end up at some point with a world with fewer but more systemically important systemic players. And I am not convinced that a world with five G-SIBs instead of the current list of thirty would necessarily be more stable.

Despite this less-than-ideal starting position, the Bank ultimately embraced the provision of liquidity to the system over the course of the crisis, with the expressed aim of reducing the costs of disruption to critical financial services. This came about via an alphabet soup of schemes, including DWF, ECTR, ELTR, FLS, ILTR, and SLS. 3 Common to all was a  2  See Plenderleith (2012) for details of episodes of lender of last resort since 1973. 3  More information about these schemes is available on the Bank’s website: http://www.bankofengland.co.uk. BIS central bankers’ speeches  3  recognition that to achieve its aim, the Bank needed to provide liquidity against a wider range of collateral, to a wider range of counterparties, for a longer term. Two other innovations are noteworthy. •  First, in some circumstances the Bank lent in a currency other than sterling – a first for our liquidity insurance operations. 4  •  Second, the Bank acted as a market maker of last resort in the sterling corporate funding markets – making small targeted purchases and sales of commercial paper and corporate bonds. 5  Many of these changes were made in the heat of the crisis. And since the 2012 Winters and Plenderleith Reviews 6 much effort has been exerted in hardwiring them into our operating framework to make it clear to market participants how we would act in future.
With price-level targeting, the de facto near-term target would regularly vary according to (recent) inflation outturns and the time horizon for offsetting them. That might confuse households and firms about the long-term objective, making it more difficult for the central bank to maintain credibility. By repeating an unchanging and simple message about the inflation rate we are aiming at (2%), we may make it easier for households to learn about our aims. (d)  How should central banks respond to asset prices? Others argue that whether the central bank targets consumer price inflation or the price level, they should also target asset prices. On this question, I subscribe to much of the current orthodoxy 27 . Of course, changes in asset prices feed into policy making as they are an important influence on demand conditions, through households’ wealth, firms’ cost of capital, and the price (exchange rate) at which we trade with other economies. But I do not believe we should use interest rates to target asset prices alongside consumer price inflation. In the first place, we just do not know enough about the determination of asset prices – especially of risk premia – to have much of an idea about what price to target. Big moves in asset prices do occasionally occur because of changes in the underlying economic fundamentals. We could not be relied upon to distinguish between those benign changes and bubbles.

Prasarn Trairatvorakul: Policy Forum marking the Bank of Thailand’s 70th anniversary Welcome remarks by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, to the Bank of Thailand’s 70th Anniversary and 3rd Policy Forum, Bangkok, 12 December 2012. *  *  *  Governor Glenn Stevens, Distinguished Guests, Ladies and Gentlemen, 1. It gives me great pleasure to extend a warm welcome to all of you, our distinguished guests, to the Bank of Thailand’s Policy Forum. Today’s gathering marks the third such event organized by the Bank of Thailand. The policy forum serves as a platform for prominent academics, policy-makers and market participants to learn from the visions and insights of outstanding international leaders. More importantly, the discussion and knowledge-sharing arisen from this forum will further equip the Bank of Thailand with a broader and deeper pool of knowledge to pursue its mandate. On that note, let me add that this year marks the 70th anniversary of the Bank of Thailand, an institution that has always been committed to preserving economic and financial stability. This commitment would not be possible without continual upgrading of our knowledge base through forums such as the one today. 2. Today, the Bank of Thailand is truly honored to have Governor Glenn Stevens of the Reserve Bank of Australia with us to share his thoughts on “Challenges for Central Banking”. This talk is especially timely because the effects of the global crisis are spreading to our region.
Challenges of Open Trade It is important to recognize that while trade and international integration tend to increase the overall economic pie, the distribution of the larger pie may be very uneven. In fact, slices for individual groups may shrink. Some workers—particularly those in industries that are less able to compete and whose skills have become less relevant—can be hurt and find it difficult to adjust. This often requires individuals to change industries and to relocate to different regions. So, while trade is almost always a win for a country’s economy, not everyone within that economy will be a winner. This is especially the case where there are no policies to cushion the negative consequences of trade and to facilitate adjustment. Effects are also country- and industry-specific, and depend on initial endowments and conditions. Low-income workers in emerging markets, for example, may find it more difficult to adapt given weaker safety nets and less financial resources available to deal with adverse economic shocks. The bigger the adjustment process, the more the gains from trade will tend to be eroded. While the rise in the skill premium from trade liberalization has been well established for both developed and developing countries, determining the aggregate impact of trade on jobs has been more challenging. To date, the evidence has been mixed. We need further research in this area to determine with more confidence a reasonable range of estimates for these employment effects.

I would like to say that, as we all know, the Spanish financial system has undergone intense restructuring and recapitalisation, as well as a significant consolidation process. I am confident that Spanish banks are prepared for this rigorous exercise. Setting up the Single Supervisory Mechanism and making it operational is not going to be a simple task. Both from the procedural and organisational standpoints, it will be a complex process, requiring great effort, and will be a major responsibility for those who take on the leadership of this new European Union-wide institution. BIS central bankers’ speeches  1  Ms Sabine Lautenschläger’s responsibilities as member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the SSM place her in a unique position. I have no doubt that her intervention will be extremely interesting and informative to us all. 2  BIS central bankers’ speeches
Conclusion  Pay prospects are determined in part by employment, in part by productivity and in part by power. All three have been important in explaining the weakness of pay during its recent “lost decade”. And each is likely to continue to be important for pay in the period ahead. Monetary policy can support the first piece of the pay jigsaw – employment. It has done so significantly over recent years, perhaps to the tune of creating 1 ½ million new jobs. But it can do little over the medium term to support productivity or to reshape the structural forces influencing pay power, the second and third pieces of the pay jigsaw. Doing so relies on policies which shift the supply side of the economy. Longer-term, it is through improved skills, productivity and structural reform and regeneration that pay power for workers can be restored. This underlines the importance of the Government’s Industrial Strategy, whose objectives are to do just that. In its White Paper on Industrial Strategy published last year, the Government proposed setting up an Industrial Strategy Council. 31  This independent body of experts was designed to monitor, and report  publically, on progress towards meeting the objectives of the industrial strategy. Earlier this week, I was delighted to be appointed, in a personal capacity, to Chair the Industrial Strategy Council. I believe it can play an important role in supporting the Government’s industrial strategy, which seeks to increase living standards across the UK, help industry to thrive and boost workers’ pay power.

This is consistent with superstar firms gaining a greater degree of 25  monopolistic power over customers. There is also evidence linking superstar firms to rising degrees of  concentration in the labour market, consistent with a greater degree of monopsonistic power over workers. 26  These shifts in industry concentration appear to have influenced pay growth. Rising concentration across different sectors of the US economy has been found to have had a significantly negative effect on their labour share. 27  Monopsony power among US industries has been found to have had a negative effect on  wage growth in that sector, the more so when unionisation rates are low. 28  And larger firms have also been 29  found to differentiate to a greater degree in the wages they pay their workers. Colleagues at the Bank, Will Abel, Silvana Tenreyro and Greg Thwaites, have recently found similar effects in the UK. 30  Higher industry concentration is associated with lower pay, the more so the less of a sector is  covered by collective bargaining. One important difference from the US is, however, that labour market concentration has not increased anything like as much in the UK as in the US. This, too, might help explain the relative flatness of the UK’s labour share. 23  For example, Autor et al (2017a). Concentration in the labour market is only one means by which an employer might enjoy greater bargaining power over workers.
On top of this system, banks or similar credit institutions can create money by lending, more or less as they do today. But it is uncertain how credit institutions will behave in a more decentralised system such as this one. It also raises new questions about where the responsibility for licensing and regulation should lie, especially if the system operates independently of national borders. This poses a risk of increased instability and more frequent crisis. Norges Bank’s role Chart: Norges Bank is tasked with ensuring: Norges Bank plays a key role in the financial system. Norges Bank is responsible for keeping inflation low and stable. That secures confidence in the Norwegian krone. We are also responsible for promoting financial stability and an efficient and secure payment system. Banks settle obligations between themselves over accounts in the central bank. If necessary, we can 5/7  BIS central bankers' speeches  provide banks with additional liquidity. At the same time, our role as the bankers’ bank gives us a channel into the wider economy, which we use to implement monetary policy. A change in our policy rate will pass through to banks’ lending and deposit rates. Norges Bank closely monitors developments in the banking industry and the financial system. Innovation and competition can bring better and cheaper services, but can also bring risks associated with, for example, cybercrime, data protection and financial stability. There is also the risk that some participants gain substantial market power.

This line of research points to the wide range of subjects that interest Thomas Philippon already shown in his 2007 book “Un capitalisme d´héritiers: la crise française du travail” 12  6  See speech by Vítor Constâncio: Banking Union: meaning and implications for the future of banking at the Banking Union Conference, Navarra University, Madrid 24 April 2014. 7  See the opening speech entitled “The implications of bail-in rules for bank activity and stability” by Benoît Cœuré at the conference “Financing the recovery after the crisis – the roles of bank profitability, stability and regulation”, held at Bocconi University on 30 September 2013. 8  Acharya, V., L. H. Pedersen, T. Philippon and M. Richardson, (2010) “Measuring Systemic Risk,” working paper. 9  See, for example, the Vox article entitled “Finance and growth: Too much of a good thing?” by Thorsten Beck, 27 October 2013. 10  Philippon, T., (2010), “Financiers versus Engineers: Should the Financial Sector be Taxed or Subsidized?”, American Economic Journal: Macroeconomics, 2(3), 158–182. 11  Philippon, T. and A. Reshef, (2012) “Wages and Human Capital in the U.S. Finance Industry: 1909–2006”, Quarterly Journal of Economics, 127(4), 1551–1609. 12  Philippon, T., (2007) “Un capitalisme d´héritiers: la crise française du travail”, Éditions Seuil. BIS central bankers’ speeches  3  where he musters a lot of empirical evidence to show that the labour crisis in France stems from bad employers-employees relations associated with a system that “preserves inheritance, direct or sociological”.