Central Bank Talk: Does It Matter and Why?

By Donald L. Kohn, Brian P. Sack. 2003

313 citations recorded by the source corpus.

Statements released by the Federal Open Market Committee (FOMC) and congressional testimony by Chairman Greenspan are found to significantly affect market interest rates, indicating that central bank "talk" conveys important information to market participants. These effects arise not only because the statements provide information about the near-term policy inclinations of the FOMC but also because the statements convey information about the outlook for the economy. By contrast, statements raising questions about asset valuations typically have not generated a significant response of those asset prices.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/06cbe99fb26ceafebf9cc875d6b414983f83c9f5

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

In Finance

Citations in the corpus

Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment (2005, unknown): “Kohn and Sack (2003). expectations of different types of statements (including “anticipated” and “unanticipated” statements), by linking statements to policy expectations at differing horizons (as summarized by the three factors), and by checking whether the directional effects of policy statements…”
How Transparent are Central Banks (2006, background): “Examples include Clare and Courtenay (2001), Perez-Quiros and Sicilia (2002), Kohn and Sack (2003), Poole and Rasche (2003), Swanson (2004) and Ehrmann and Fratzscher (2004, 2005).”
Forward Guidance and Macroeconomic Outcomes since the Financial Crisis (2016, background): “However, this variation occurs over business-cycle frequencies and so is not obviously relevant for the highfrequency changes measured by Kohn and Sack (2004).”
Understanding the Greenspan Standard (2005, background): “Kohn and Sack (2003) report evidence suggesting that the Fed chairman’s remarks on the stock market—as opposed to his remarks on monetary policy—do not have much systematic effect on stock prices.”
Look Who's Talking: ECB Communication During the First Years of Emu (2004, background): “Three closely related papers are Kohn and Sack (2003), Jansen and De Haan (2005) and Ehrmann and Fratzscher (2004)2.”
Communication and Decision-Making by Central Bank Committees: Different Strategies, Same Effectiveness? (2005, unknown): “However, we decided to keep the categorisation as simple as possible, following the terminology also used by Kohn and Sack (2003).”
Do actions speak louder than words? the response of asset prices to monetary policy actions and statements (2004, result): “A natural interpretation 20This finding is similar to a result in Kohn and Sack (2004), who used a simple regression to control for the effects of target surprises, with the residual intended to capture the effects of all other variables, including FOMC statements.”