samchain/econo-pairs-v1 huggingface dataset:
In a critical review of the US purchases during the pandemic, Levin, Lu and Nelson (2022) believe that the programme was too large and extended, and they assess that the financial losses that are now incurred are not matched by other gains. 19 [30]  This effect on interest rates seems to be relevant even today (see Figure 2). The Swedish National Debt Office's new borrowing in government bonds amounts to approximately SEK 600 billion since 2015. If the rate on these bonds has become 0.3 percentage points lower and the average maturity of the bonds is seven years, the cost of borrowing has decreased by SEK 13 billion. In addition, the Swedish National Debt Office has on average had a debt of approximately SEK 80 billion in Treasury bills. With a 0.3 percentage point lower interest rate on this debt over eight years, a further SEK 2 billion is added in reduced interest expenditure.35 An updated calculation thus indicates that purchases of government bonds may have reduced government borrowing costs by approximately SEK 15 billion in 2015-2022. The financial loss of approximately SEK 5 billion caused by the purchases of government bonds in phase 1 therefore seems more than well balanced by the reduction in the costs of government borrowing. In my earlier discussion, I thought it unlikely that the Riksbank's acquisition of assets prior to the pandemic would significantly stimulate economic activity. On the other hand, the purchases made it possible to strengthen confidence in the inflation target.

The last FOMC I believe that the Fed should, in most circumstances, not directly concern itself with fluctuations in financial-asset prices. If the economy is strong, the securities markets will be propelled by that strength. If the real economy is hearty, it can withstand reversions to the mean of junk bond or any other trading market and stock market corrections: It did so during the prolonged correction of 1962 and again in 1987. For this reason, as we approached our 2  BIS central bankers’ speeches  deliberations at last week’s FOMC, I saw no reason for the Fed to react to the heightened volatility that occurred in mid-October and strongly advised my colleagues that we should be wary of any action we might take at the FOMC that would lead investors to assume there is a “Yellen Put” hidden in our pocket. For this would only encourage continued indiscriminate investing. I view the economy as becoming stronger. My colleagues and I at the Dallas Fed realize that the current unemployment rate, at 5.9 percent as of September, is still somewhat above most estimates of the “natural,” or minimum-sustainable, rate of unemployment. But the gap between actual and “natural” unemployment has been rapidly shrinking and is now less than 1 percentage point. Some commentators argue that the unemployment rate hasn’t been a reliable indicator of labor-market slack during the last five years. As evidence, these commentators point to subdued wage growth.
Honoured guests: There is no doubt that inflation targeting is the future for monetary policy in Iceland, as it is for other countries with monetary independence, even though targets may be modified along with the tools used to attain them. There was a time when it was believed that central banks could achieve their objectives by wielding a single weapon: seven-day interest rates. It was also believed that central banks should think only about the transmission of monetary policy to the real economy and let the financial system alone in other respects. In the narrowest sense, the task in hand was inflation, not asset bubbles. But this narrow policy was doomed to crash and burn, here as well as elsewhere. Monetary policy has been reformed and strengthened since then, and is sometimes referred to as inflation targeting-plus. In May 2015, London Business School professor Hélène Rey published an influential paper bearing the title Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence. Rey argued that, because of financial integration, independent monetary policy was actually no longer an option for small currency areas unless it was possible to manage the capital account directly or indirectly, no matter what exchange rate regime was pursued.

I suppose it should not be a surprise that the challenges I have outlined involve relatively long horizons. As a central banker, we are trained to focus always on the medium to long run. After all, it is precisely such a focus that enables central banks to best serve as pillars of economic stability over time. Against this backdrop, let me now turn to the BOT’s role in meeting these challenges. Starting with monetary policy, the key focus at this juncture is to strike the right balance between accommodating the domestic recovery while ensuring stability in the long-term. In the context of the sharp slowdown in economic activity from the floods, moderating inflationary risks, and pronounced headwinds from the global economy, the MPC decided to ease policy during the last two meetings. These policy actions have helped to shore up private sector confidence and accelerate the return of economic activity to normal levels. The MPC is firmly committed to maintaining long-term price stability and interest rates are currently at a level that is deemed to be consistent with that goal. Moving further afield, it is clear from my earlier remarks that setting Thailand on a path to long-run economic prosperity will entail lifting the competitiveness of our economy. What contribution can the BOT make in this regard? First and foremost, as well as most obviously, the BOT needs to deliver on its mandate of macroeconomic stability. Ample evidence has demonstrated that a stable macroeconomic environment is a key prerequisite for sustainable growth in the long run.
There have been six reports from the Treasury Select Committee, two reports from the House of Lords’ Committee on the MPC, reports by a commission of the Conservative Party and by the Liberal Democrats, a report by the Engineering Employers’ Federation, recommendations by many economists, including former MPC members, and, last but not least, the report commissioned by the Bank of England itself by Don Kohn, a senior staff member of the Federal Reserve Board and recently nominated by the President for appointment to the Board of Governors. Overall, the verdict on the Committee has been broadly positive. For example, in his 2001 review of the operation of  6  BIS Review 34/2002  monetary policy in New Zealand, Professor Lars Svensson describes the Bank of England and the Swedish Riksbank as examples of “best practice” monetary policy. Suggestions for improvement from the various groups cover the following areas: the definition of the inflation target; terms, appointments and composition of the membership of the MPC; arrangements for publication of the minutes; the forecast produced by the MPC; and, finally, a miscellaneous collection of technical matters. The precise definition of the inflation target, and its numerical value, can be debated at length. What is important is that the target is for inflation and not additional objectives that would lead to confusion about the Committee’s aims.

It is worth pointing out here, which I often and willingly do, that if one thinks that it does not matter that inflation on average is below 2 per cent and at the same time dislikes a zero or negative policy rate – which seems to be a fairly common combination of views – then these are two arguments that contradict one another. If average inflation is below 2 per cent, then a zero or negative interest rate will inevitably become even more common. As inflation today is far too high, this discussion has for the moment disappeared from the agenda. However, as I said earlier, it is not impossible that we might return to a situation in a couple of years where it will reappear. A good and a bad scenario The present economic policy frameworks thus provide favourable conditions for returning to the inflation target within a reasonable time perspective. And there is no doubt that the Riksbank has the tools required to achieve this. When it comes to raising the policy rate, there is no upper bound in the same way as there is a lower bound. Of course, interest rate hikes are associated with costs too, but the difficulties of bringing inflation back to the target are not about binding restrictions but about how quickly this can reasonably be achieved. Even if considerable strains might be imposed on the real economy during the process, there is no doubt that we will do what is necessary to meet the inflation target.
While the debt issue does not look to be serious for now, a build-up of household debt stock could imply that private consumption would likely to become more sensitive to interest rate changes. This would have a direct implication on monetary policy because even a small change in the policy rate could now have a large impact on GDP when households are highly leveraged. It is therefore prudent for us to monitor household debt closely and ensure that the rise in household leverage is manageable. The second challenge is posed by the slow recovery of commercial bank credits. Despite some positive development, it is clear that credit expansion has not kept up with economic growth, and the intermediary process between depositors and investors is still clogged up. While it is true that many companies can now resort to other means of financing such as issuing debentures or drawing from their retained earnings, the banking sector is still by far the largest source of funds for the corporate sector and is likely to remain so for many more years. Thus, a dysfunctional banking sector can surely threaten to undermine the strength of the economic recovery. In the near term, non-performing loans (NPL) as well as non-performing assets (NPA) must be reduced more speedily, and indeed this has been one major focus of my work at the Bank of Thailand.

This lesson had been sorely learned from the Great Depression. The magnitude of the shocks hitting the world economy over the past year or so – as measured for example by the initial contraction in global industrial production – appears comparable with the Great Depression of the 1930s. 1 But, in the Great Depression, global industrial output declined fairly continuously for three full years. In contrast, global industrial output on this occasion seems to have broadly stabilised in a little over a year. There are many differences between now and the 1930s. However, I have little doubt that one of the key factors contributing to the quicker stabilisation of activity this time around has been the speed and decisiveness with which policy throughout the world responded to the twin threats of a failing banking system and falling confidence. At home, the Monetary Policy Committee cut interest rates from 5% to 0.5% in just six months. And with interest rates close to their lower bound, the Committee in March of this year voted to start a programme of asset purchases financed by the issuance of central bank reserves, otherwise known as “quantitative easing”. These extraordinary actions were intended to reduce the risk of inflation falling below the 2% inflation target that the Bank of England is mandated to meet. They do so in a number of ways. The reduction in Bank Rate by lowering interest payments on loans has improved many companies’ cash flows at a time when turnover is weak and working capital is scarce.
When the Riksbank did not want to do this, Heckscher decided to do something about it. The right to exchange notes for gold had ceased in connection with the outbreak of the war in 1914, but was reintroduced in 1916. However, since an export ban on gold had been introduced in 1914, this did not mean in practice that the gold standard had been re-established. The export ban allowed the gold price to differ between countries and the value of the krona to change against other currencies. This was also the case as the krona depreciated against the dollar. At the US Federal Reserve, the price of one kilogram of gold in the depreciated Swedish currency was SEK 3,600 at the beginning of 1920. At the Riksbank, the price of one kilo of gold was instead SEK 2,480. If the export ban were to be lifted, then a considerable arbitrage gain could be made. Heckscher decided to draw the general public's attention to this fact and did so through an article entitled “The new price revolution” (Den nya prisrevolutionen), published in the daily newspaper Stockholms Dagblad on 11 March 1920.

7 [14]  markedly and resulted in a price and wage build-up process, where wage costs rose by at most about 20 per cent a year. The Minister of Finance at the time, Per Edvin Sköld, took a number of measures: Excise duty on sales of cars was raised, building regulations were tightened, the forest industry had to deposit some of its large profits in special accounts and an investment tax was introduced.19 The interest rate was also raised by half a percentage point, which, according to a modern yardstick, may seem rather modest given the circumstances. Altogether, this meant that inflation was short-lived on this occasion too, and it is also known in the history books as the ‘one-off inflation’ (engångsinflationen). Expansionary policy during the most recent inflation period The longer period of high inflation from the early 1970s onwards is, of course, the first one I remember myself. The link to war is not as obvious as in the previous episodes, but it is definitely there (see Figure 2). The two oil crises in 1973-74 and 1979-80, often referred to as OPEC I and OPEC II, play quite an important role in this process OPEC I was preceded by the so-called Yom Kippur War of 1973 between Egypt and Syria on the one hand and Israel on the other. OPEC II is linked to the revolution in Iran in 1979, which led to a significant loss of oil production that was not matched by the other oil-producing countries.
In my view no single area should be put aside from this review which should concentrate on the ways and means to foster financial stability, prevent propagation of disturbances and contagion, improve risk management at all levels, and diminish procyclicality, in particular, in the domains of accounting rules and accounting practices of rating agencies, of supervisory banking rules – the first duty being to implement globally Basel II which is largely superior to Basel I – including harmonisation of liquidity rules and requirements, of supervisory insurance rules, of market supervisory authorities regulations, of regulated and non regulated private institutions (whether highly leveraged institutions or so-called S.I.V. and conduits), and of market practices. This does not mean necessarily dramatic changes of rules and overloading of new regulations. I am of the firm opinion that voluntary code of best practices, the set up of voluntary “Principles” and the working out of voluntary benchmark best practices are most of the time preferable to the addition of new layers of rules and regulations. But we have, in any case, the duty to be effective in working out the lessons of the present market correction. This is no time for complacency in any respect. Thank you very much for your attention. BIS Review 137/2007  3

But the consequences for economic stability will be determined, among other things, by the weight of each one and by the response of monetary policy and other economic policies. In any case, it is clear that something has to give. As Chart 1 shows, we are undergoing a period of several years during which unit labour costs are growing well in excess of the level that is consistent with the inflation target. At the same time, productivity growth is very weak. 2  BIS central bankers’ speeches  If the Central Bank’s most recent forecast materialises, the result will be as is shown in Chart 2: the real exchange rate and wage share will rise far above their historical averages, and the tension in the labour market will be amplified even further. But I consider it unlikely that this will be the outcome. Either the adjustment will take place through some combination of higher inflation and higher unemployment, or positive shocks will provide some assistance; for example, the improvement in terms of trade will be greater and more lasting, productivity growth will be stronger, and interest payments to abroad will be lower because of reduced external debt and improved credit ratings. It will be very interesting to see how things develop in the next few years. It would be imprudent, however, for economic policy and contingency planning to rely blindly on positive shocks. And then there is inflation.
The economic situation, inflation and the risk spectrum Our most recent Inflation Report contains a sketch of the Swedish economy that anticipates a relatively slow rate of growth for this year, but then a growth rate that is sustainable in the long term. GDP growth is assessed to be 1.7 per cent in 2003 and 2.4 per cent in 2004 and 2005. This means that the resource situation in the Swedish economy will not be strained over the coming years. Thus, economic activity is not expected to put any great pressure on prices and wages in future. Our picture of resource utilisation has been affected by the revisions Statistics Sweden made to the National Accounts recently, which indicate that productivity growth in the economy has been higher during the greater part of the 1990s than we had previously assumed. This means in turn that the economy’s long-term potential growth rate must have been slightly higher than we believed. Nevertheless, inflation rose tangibly during the spring and in February was 3.4 per cent according to the annual CPI rate. This is primarily due to higher electricity prices resulting from extremely low water levels in hydroelectric power station reservoirs and to higher oil prices. As I mentioned at the start, the energy price rise is expected to cause only temporary price rises and inflation is thus expected to fall back during the spring as electricity and oil prices decline.

In addition, there was already uncertainty before the war with regard to the development of the US economy, which was connected with the large saving deficit, including a very large current account deficit. In my opinion, therefore, one cannot rule out the possibility of more interest rate reductions than that decided at the last Executive Board meeting, because of the present uncertain situation for the global economy. Labour supply, productivity and growth in the long term As I mentioned earlier, the economy’s long-term production capacity is very important for monetary policy. It affects the rate at which the economy can grow and thereby how rapidly our prosperity can increase. Deciding factors for the speed at which the economy can grow are investment, labour supply and technology developments - e.g. machines becoming more modern or utilised more efficiently. Labour supply, in particular, will affect the growth of the economy in future. If we use Statistics Sweden’s population forecast as a starting point, we can see that the population will increase up to 2009 by an average of 0.5 per cent a year, which is slightly lower than the increase during the 1990s. Thereafter the population will decline by an average of 0.3 per cent a year. This forecast is relatively certain, compared with forecasts of economic activity. This means that population growth in the long term will undermine welfare. Most other European countries share this problem - in most of the larger EU countries the population growth is expected to be even poorer than in Sweden.
It is almost impossible to imagine today’s welfare level without the specialisation brought about thanks to a world of open borders. Norway exports a limited range of goods and services to the world market. This allows us to finance imports of numerous finished goods, which are cheaper than if we had manufactured them at home. Labour is thereby freed up for use in education, health and other services. Access to capital and technology abroad has enabled us to develop new industries based on domestic natural resources. Hydropower and the oil industry are prime examples. We now invest our petroleum wealth in capital markets. The Government Pension Fund Global (GPFG) allows Norway to take a share in global value added. We need other countries – more than they need us. The foundation for today’s global trade cooperation was laid in the years following the Second World War. Institutions such as the IMF and the World Bank fostered closer economic cooperation between countries. The ratification of the General Agreement on Tariffs and Trade (GATT) marked the beginning of a gradual reduction of tariff barriers, which culminated in a rulebased, multinational trade system under the aegis of the World Trade Organization (WTO). 1/6  BIS central bankers' speeches  History has shown that the trend towards a more open and liberal world order can reverse, as seen in the interwar period. This may now be happening again. Brexit, the UK’s exit from the EU is the first major setback for European integration in several decades.

This has prompted discussions about market access, intellectual property rights and trade balances. Global economic integration is not straightforward, but the shortcomings in today’s framework for global trade must be dealt with through reform and not increased protectionism. New barriers will not help poor regions or those that have been left behind in western economies. For Norway, exports of goods and services account for more than a third of GDP. Norwegian businesses are part of global value chains. This means that protectionist measures can spill over into the Norwegian economy even if Norway is not directly targeted. Chart: We trade mostly with the EU The international framework and trade agreements we have with other countries are essential to the Norwegian economy. The EEA agreement is of particular importance. Thanks to the free flow of goods, services, labour and capital within the EEA area, Norway’s domestic market is about 100 times bigger than it would have been otherwise. A good half of our trade with other countries is with EU countries (Chart 5). Common regulations and product standardisation facilitate market access for Norwegian firms. Norwegian business and industry may soon feel the consequences of Brexit. The UK is an important trading partner. The UK’s exit from the EU means it will also exit the EEA agreement, creating uncertainty for many firms. 2/6  BIS central bankers' speeches  At the same time, international economic cooperation is creaking.