samchain/econo-pairs-v1 huggingface dataset:
The Riksbank has therefore specified a target, whereby inflation should be 2 per cent. To emphasise that it is not possible to continuously achieve the target exactly, the Riksbank has also specified a tolerance interval around the target of plus/minus 1 percentage point. The Riksbank’s inflation target is well in line with the targets chosen by other central banks. The fact that we have a target for inflation does not mean that we disregard developments in employment and unemployment. The Riksbank conducts what is usually called flexible inflation targeting. This means that we take real economy developments into consideration when making monetary policy decisions. If inflation for some reason deviates from the target, we must decide how quickly inflation should be brought back on target. This depends on how, among other things, unemployment is affected. This is also in line with the preliminary work to the Sveriges Riksbank Act. It is stated there that the Riksbank shall support the targets for general economic policy with a view to achieving sustainable growth and employment without prejudice to the objective of price stability. There is no simple correlation between inflation and unemployment Unemployment varies over the economic cycle. Normally, unemployment is below its so-called longterm equilibrium level when economic activity is good. A high level of resource utilisation in the labour market normally also means that the pressure from wage increases is high. This in turn has the shortterm effect of pushing up inflation. In economic downturns, however, unemployment is high and resource utilisation is low.

Irma Rosenberg: Monetary policy and the labour market Speech by Ms Irma Rosenberg, First Deputy Governor of the Sveriges Riksbank, at Simra, Stockholm, 22 May 2007. *  *  *  Introduction Thank you for the invitation to come here! After the economic crisis and the changeover in economic policy at the beginning of the 1990s, the Swedish economy has functioned much better than anyone could have imagined. GDP growth has been higher than in the 1970s and 1980s, inflation has been low and more stable and real wages have increased much more quickly than during both of the previous decades. However, developments in the labour market have not been as favourable. Unemployment rose tangibly in connection with the crisis in the 1990s and has since then remained at a higher average level than before. Inflation has on average been slightly lower than the Riksbank’s inflation target since it was introduced in 1985. During the years 2004-2005 inflation was noticeably below the target. It may therefore be relevant to claim that the high unemployment is largely due to incorrectly balanced monetary policy. There are also debaters who have implied that an economic policy that aims at low inflation can in itself contribute to unemployment being higher than necessary. I intend to devote my speech today to explaining my views on this.
Figure 3 Inflation and interval for maintained confidence in the inflation target Inflation  t  10  BIS central bankers’ speeches  Figure 4 Inflation below the interval lowers expected and actual inflation  Inflation  t  Figure 5 The central banks need to find ways to extend the interval and maintain confidence  Inflation  t  BIS central bankers’ speeches  11  References Anaya, Pablo and Michael Hachula (2016), The Dilemma or Trilemma Debate: Empirical Evidence. DIW Roundup 95, German Institute for Economic Research (DIW). Aizenman, Joshua, Menzie D. Chinn and Hiro Ito (2015), Monetary Policy Spillovers and the Trilemma in the New Normal: Periphery Country Sensitivity to Core Country Conditions. NBER Working Paper No. 21128. Ball, Laurence M. (2013), The Case for a Long-Run Inflation Target of Four Percent. IMF Working Paper WP/14/92. Bernanke, Ben S. (2016), What Tools Does the Fed Have Left? Part 3: Helicopter Money. Blog entry, Brookings, 11 April, http://www.brookings.edu/blogs/ben-bernanke/posts/ 2016/04/11-helicopter-money. Blanchard, Olivier, Dell’Ariccia, Giovanni and Mauro, Paolo (2010), Rethinking Macro Policy. IMF Staff Position Note SPN/10/03, International Monetary Fund. Caceres, Carlos, Yan Carrière-Swallow and Bertrand Gruss (2016), Global Financial Conditions and Monetary Policy Autonomy. IMF Working Paper (forthcoming). Côté, Agathe (2014), Inflation Targeting in the Post-Crisis Era. Remarks at Calgary CFA Society, Calgary, Alberta, 18 November. Disyatat, Piti and Phurichai Rungcharoenkitkul (2015), Monetary Policy and Financial Spillovers: Losing Traction? BIS Working Papers No. 518. Flodén, Martin (2015), Sweden needs its inflation target. Speech at Fores, Stockholm, 13 October.

Briefly, it is because it is important both to have a credible anchor for price and wage formation and for this anchor to be far enough above zero that the policy rate does not hit its lower bound too frequently. BIS central bankers’ speeches  excessively rapid and powerful appreciation of the exchange rate could be problematic – it can be difficult for a central bank in a small, open economy to allow large interest rate differentials towards the rest of the world. The way forward – what can we expect and what kind of preparedness should we maintain? If it has now become more difficult to conduct monetary policy, what can the Riksbank and other central banks do? Now that Swedish inflation is starting to approach the target, it may be time to lift our gazes and start thinking about the conditions for monetary policy over a slightly longer perspective. How should we consider these in the period ahead – what kind of preparedness should we maintain? I intend to focus on the consequences of the low global real interest rate, as I deem these to be potentially the most sweeping. So far, the influence of large central banks on the monetary policy of smaller countries such as Sweden seems not to be something we need to be too concerned about under normal circumstances, as long as we have a floating exchange rate.
A bank-run stress test allows supervisors to evaluate how good each individual bank – and the banking system in general – is at assessing the risks it faces in a stress scenario and translating this into an appropriate amount of capital to set aside against these risks. Crucially, supervisors do not simply accept the results the banks produce in these tests – they evaluate both the adequacy of the numbers the banks produce and the processes they use to get there. If all we ever did was run supervisory stress tests in which we instruct banks in detail how to perform the test, we would be in the position of a parent who shows his child how to solve each problem in her homework – and never discovers whether the child can do the work on her own or not. The CCAR process differs from the SCAP in several key respects. First, in the CCAR there was no disclosure by the Fed of the stress test results. In CCAR, the focus was on assessing the sensitivity of the firms’ own projections of capital under the baseline and stress scenarios to alternate assumptions and estimates. The results do not lend themselves to direct,  2  BIS central bankers’ speeches  apples-to-apples comparisons like the results in the SCAP. Second, the emphasis was on the capital planning process, not forcing the banks to raise capital to withstand a stress environment. Third, the CCAR was conducted at a different stage of the economic cycle.

Taking into account the range of values and the uncertainty surrounding this calculation, we consider that the neutral MPR lies within the 3.75 to 4.25% range, that is, 25 basis points below the range we expected until March, partly reflecting the drop in interest rates around the globe (Figure 7). III. Baseline projection scenario  The convergence of inflation to the 3% target is subject to a baseline projection scenario that features the following characteristics. III.1. Activity and demand On one hand, as I mentioned, it considers that the activity gap will close throughout the projection horizon, a period in which the economy will accumulate growth above its potential. This is consistent with GDP growing in 2019 between 2.75% and 3.5%. This range is below the range we expected in March, mainly reflecting the effects of the negative surprise of activity in the first quarter. Actually, this projection assumes that the economy will resume higher rates of annual expansion in the second half of this year. For 2020 and 2021, higher growth rates are foreseen, between 3% and 4% in both years (Table 3). Page 4 of 18  On the expenditure side, compared with March, the biggest adjustments are seen in gross fixed capital formation (GFCF), a component that, instead of growing 6.2% this year as projected, will grow only 4.5%. This revision owes to a great extent to the poor first-quarter performance of the machinery and equipment component. This weakness has continued, according to partial second-quarter data.
20  See, for example, the above-referred to Goodhart and Rochet and also M. Woodford, “Inflation Targeting and Financial Stability”, speech at the conference “The Future of Central Banking”, in Rome, September 2010. 6  BIS central bankers’ speeches  Focus on the repo rate over the coming six months Correspondingly, we should concentrate on assessing the repo rate in the coming period, as there is such great uncertainty over the repo rate in the longer run. The Riksbank sets the repo rate. This means that we normally have a fairly good idea of the repo rate level over the coming period, although the situation can sometimes change rapidly and radically as it did in autumn 2008. Market expectations prior to a monetary policy meeting also normally agree with the decision we make regarding the repo rate. Any surprises in the actual decision on the repo rate are normally very minor (see Figure 12). However, there is great uncertainty over the repo rate in the longer run. This is illustrated by the fan chart showing the repo rate. Whether the repo rate path will agree with the forecast will of course depend on how the economy develops in the future. If inflation and resource utilisation develop in line with the main scenario, the repo rate should follow the repo-rate path outlined in the main scenario (the middle line in the figure).

There has also been a recent shift in opinions coming out of academic research, from a broad resistance to taking financial stability into account when shaping monetary policy19 to greater openness to the view that there may be good reasons for doing so.20 Even before the financial crisis hit Europe and Swedish with full force in autumn 2008, there were concerns in the Executive Board that the credit expansion was too rapid and that housing prices were increasing too quickly so that a bubble might build up, and later burst to cause a severe recession. This was not the case in Sweden, but did happen in the United States and several countries in Europe. During the crisis years 2009–2010 the endeavour was instead to use low interest rates and liquidity assistance to the banks to avoid a credit crunch that could intensify the crisis. And we succeeded well in this. During the entire period, the banks’ total lending to households and companies in Sweden increased (see Figure 11). Put greater emphasis on the initial situation and the forecasts for the coming year We should put greater emphasis on the initial position and the forecasts for the coming year than on the long-term forecasts. At the Riksbank, considerable resources are put into analysing the state of the economy. The statistics received are analysed and commented on regularly.
Both in Norway and the rest of Europe, the fall in the number of working hours is ascribable to longer holidays and shorter working days. The standard working year is short in Norway, but on the other hand Norway also has a higher percentage of part-time employees than other countries. Access to these working hour arrangements has made it easier for women and young workers to enter the labour market. 8  See for example OECD (2006): Economic Policy Reforms: Going for Growth; Bart van Ark (2005): “Europe’s Productivity Gap: Catching Up or Getting Stuck”; and Christine Cumming: Panel Remarks in a Symposium on Productivity, Competitiveness and Globalization, Banque de France, Paris, November 4, 2005. 9  See for example Cumming (2005) and van Ark (2005), op.cit. 10  European Commission (2005): Special Eurobarometer 224, Europeans, Science and Technology, June 2005. 11  Source: Telemark University College: Norwegian Mathematics Council’s autumn 2003 survey among new students, February 2004. BIS Review 10/2006  7  The income level in Norway has increased. Many may prefer to take advantage of this by increasing their leisure time in the form of shorter working days or longer holidays. And this has in fact taken place. Moreover, the retirement age is steadily declining. The expected retirement age is now below 60, when disability pensioners are taken into account. At the same time, life expectancy has increased, and leisure time accounts for an increasing share of our lives.

In addition to career talks and workshops, we will launch a virtual resource centre in the next few months, so that university students and graduates can conveniently find out the various job types, career paths and job opportunities available in the banking industry through this “one stop directory”. Conclusion 24. Ladies and gentlemen, let me finish by emphasising that, as with any other industry, the success of our financial sector depends on a solid foundation based on the expertise of people working in it. Those expertise needs to be guided by a proper mindset, and they have to possess a deep pool of skillsets that evolve over time to cope with developmental challenges. The HKMA, together with the industry, have invested a lot of efforts over the past few years to cultivating both a proper mindset and essential skillsets for our talent pool. I hope my update today will offer the audience a glimpse of hope that we do have a solid foundation for our financial industry’s future development. And hopefully what I said would also set the stage for fruitful discussions in the several panels later in the day. 25. Thank you very much. And I wish today’s Conference a great success.
The BIS Review 7/1999  –3–  exaggeratedly strong exchange rate against the core European currencies – reflecting inter alia market misperceptions about the prospective strength, or rather weakness, of the euro – was itself moderating external demand, especially for manufacturing output, while at the same time exerting a restraining price effect on domestic inflation. But domestic demand growth – including demand for services – continued to accelerate through 1997, and that was the background to the tightening of monetary policy in 1997. We could not avoid that tightening, despite the uncomfortable sectoral imbalance within the economy. To have done so would, as I have said elsewhere, have put the whole of the economy – including the internationally exposed sectors we would have been trying to shelter – at risk of accelerating inflation, so it would not have helped even those sectors in anything other than the short term. Meanwhile, in the euro-zone things were very different. Demand and output growth in the major continental economies remained generally fairly sluggish for much of the period, only really starting to pick up towards the end – helped by relatively weak exchange rates. Unemployment, which is much the most urgent and important issue confronting Europe, actually increased; and, despite some improvement over the past year or so, it remains at or close to double digit rates in all the largest euro-zone countries. Inflation against this background remained low, tending lower – as did interest rates.

It involves in effect aiming to keep overall, aggregate demand in the economy (as a whole) more or less continuously in line with the underlying overall capacity of the economy (as a whole) to BIS Review 7/1999  –2–  meet that demand. Effective price stability is essentially a measure of our success in achieving economic stability in that much broader sense. It is a limited role. Neither we nor the ECB can do very much directly to affect the underlying supply side of the economy which depends upon its structural characteristics, and above all, in today’s world, on the efficiency and flexibility of goods, capital and labour markets. Monetary policy cannot substitute for supply-side reform, but by maintaining price stability we can, indirectly, help markets to function more effectively. Nor can either the MPC or the ECB do much directly to influence the pressures on particular firms or particular sectors or regions of the economy; we and they can only influence the monetary situation in the economy of our respective currency areas, as a whole. We have essentially one instrument: the short-term interest rate. But, again, if we are successful in achieving overall stability, that will also contribute over time to a more rather than less favourable operating environment for the different component parts of the economy. But that is the most that either we in the MPC or the Governing Council of the ECB can hope to do.
Would it come as a surprise to anyone in this room that some of the Swiss cantonal banks may also have “issues” with respect to U.S. tax compliance? Switzerland, the home country to the two big Swiss banks and the jurisdiction that charters them, does not have a law that criminalizes tax evasion, meaning the willful failure to report income and to pay the tax due on that income. This may be one of the reasons why Switzerland has earned a reputation as a tax haven, although that reputation may be changing as Switzerland faces external pressure from the international community. So, is it surprising that personnel from Switzerland, working for an organization that for many years had a business strategy of taking funds from high net worth customers without many questions about taxation at the source, did not turn square corners when visiting New York? Does it shock you that they would meet with U.S. customers and discuss their accounts, even though that was prohibited by the rules imposed by compliance? Once again, when the rules are in conflict with an organizational value system, watch out! People will find a way around them, either by closing their eyes or by whispering in the darkness. Finally, let me turn to foreign corrupt practices. I have selected this topic because official corruption is a problem that some U.S. financial institutions have found challenging during the last year.

And, in my view, there are certain features of U.S. law that might give rise to conflict between organizational values and FCPA compliance. The Foreign Corrupt Practices Act was enacted in 1977, and it represents a Congressional response to revelations of widespread bribery of foreign officials by U.S. companies. One purpose of this legislation is stopping official corruption. Then, and continuing to the present time, the United States led the world in enacting laws designed to stop official corruption, and perhaps more importantly, in enforcing these laws. Let me say that, as an American lawyer who spends significant time outside the United States, this is a part of our legal infrastructure that I take pride in. With all of that said, there is one part of the FCPA that makes me uncomfortable. The FCPA’s bribery prohibition, and the compliance officers in the audience will know this well, contains a narrow exception for “facilitating or expediting payments” made in furtherance of 2  BIS central bankers’ speeches  routine governmental action. Some of the cynical among you might know this provision as permitting so-called “grease” payments for non-discretionary acts, like processing visas or providing phone service. But, let us face it, this statutory exception permits a certain limited form of governmental corruption. While I understand that the exception is grounded in a practical reality, I feel that zero tolerance for official corruption would have been a better choice.
At the same time, petroleum-related exports, which account for about a quarter of mainland exports, will likely decrease due to a decline in global offshore investment. It will likely take time for the effects of lower oil prices on the mainland economy to become fully visible. So far, unemployment has only shown a slight increase. A flexible labour market appears to be curbing the rise in unemployment. Employment growth has also remained firm, although an increasing mismatch between the number of unemployed and job vacancies points towards more slack in the labour market. In regions and sectors closely linked to the petroleum sector, unemployment has increased. BIS central bankers’ speeches  3  Weaker growth prospects may reduce the willingness of mainland firms to invest. On the other hand, improved competitiveness will provide a basis for expanding capacity in some sectors. In addition, housing investment is likely to support overall investment activity. House price inflation remains high. Growth in household consumption has been moderate in recent years and household saving has reached a high level, in spite of low interest rates. The pension reform and uncertainty surrounding economic developments have probably induced households to increase saving. Overall, we expect growth in private consumption to remain moderate ahead and the saving ratio to remain at a high level. Debt-to-income ratios for Norwegian households are high, reflecting a long period of rapidly rising house prices.

Measured by GDP per capita, Norway now ranks close to the top. Even if we disregard the oil sector’s contribution to growth for a moment, Norway’s mainland economy has shown relatively robust developments. The ripple effects from activities on the continental shelf to the wider economy have been wide-ranging. A growing number of firms have targeted the oil industry. A state-of-the-art oil service industry has emerged. For many firms, the contracts on the Norwegian continental shelf have been a springboard to new export markets. Although Norway’s oil age began 40 years ago, the past 15 years stand out. From the end of the 1990s to 2013, the price of North Sea oil rose from about USD 10 to over USD 100 per barrel. High oil prices and a profitable petroleum production industry have been accompanied by record-high oil investment in recent years. Increased spending of petroleum revenues over the fiscal budget has provided a growth impetus to domestic demand. Employment has remained high and unemployment low for many years, even when the financial crisis hit in 2008. It was made clear at an early stage that Norway’s oil and gas resources belong to the Norwegian people and should be managed on their behalf. The tax system for private and state-owned oil companies and framework conditions for the petroleum industry were designed so that the bulk of the large resource rents generated by the industry would accrue to the Norwegian state. We have avoided making public sector budgets dependent on volatile income.