Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence

By Alan S. Blinder, Michael Ehrmann, Marcel Fratzscher, Jakob de Haan, D. Jansen. Social Science Research Network, 2008

1,348 citations recorded by the source corpus.

Over the last two decades, communication has become an increasingly important aspect of monetary policy. These real-world developments have spawned a huge new scholarly literature on central bank communication -- mostly empirical, and almost all of it written in this decade. We survey this ever-growing literature. The evidence suggests that communication can be an important and powerful part of the central bank's toolkit since it has the ability to move financial markets, to enhance the predictability of monetary policy decisions, and potentially to help achieve central banks' macroeconomic objectives. However, the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/0a18fa61bc2b384420fbe6c53a02b7e018542f4d

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Citations in the corpus

Shocking language: understanding the macroeconomic effects of central bank communication (2016, neutral): “Blinder et al. (2008), in their survey of the large literature that has developed examining different aspects of communication by monetary authorities, define central bank communication broadly as the information that the central bank makes available about its current and future policy objectives, t”
Sentiment in Central Banks’ Financial Stability Reports* (2017, neutral): “The literature on central bank communications has mostly focused on announcements related to monetary policy (see, for instance, Blinder et al., 2008; Ericsson, 2016; and Stekler and Symington, 2016). Recent studies in this strand of the literature have used text analysis techniques to determine the”
The long-run information effect of central bank communication (2019, neutral): “…policy, but is something that central banks should take into account as part of their overall communication strategies, especially as there is increasing evidence that uncertainty has macroeconomic effects ( Baker et al., 2016; Bloom, 2009; Fernandez-Villaverde et al., 2011; Jurado et al., 2015 ).”
Macroprudential Policy - A Literature Review (2012, neutral): “The policy rate is seen as the primary instrument, with communication generally playing a supporting role (Blinder et al, 2008).”
Eliciting beliefs: Proper scoring rules, incentives, stakes and hedging (2010, background): “1Early references in statistics include Brier (1950), Good (1952) and McCarthy (1956). Interestingly, it seems that De Finetti rst introduced PSR (De Finetti 1981). A broad and inuential paper in the statistical literature is Savage (1971). Early references in economics include Friedman (1979) and”
Necessity As the Mother of Invention: Monetary Policy after the Crisis (2017, background): “In general, however, we think that, in order to be credible, communication needs to be backed up by actions—or at least by the ability of the central bank to act if required (Blinder et al., 2008).”
Inflation Targeting: What Have We Learned? (2009, background): “And the evidence recently surveyed by Blinder et al. (2008) suggests that markets react to speeches about future inflation and interest rates but not to central bank speeches about real economic activity.”
Fed Speak on Main Street (2016, positive): “Effective monetary policy communication can shape the public’s expectations, reduce uncertainty, and provide accountability for politically independent central banks ( Stiglitz, 1998; Blinder et al., 2008; Dincer and Eichengreen, 2009 ).”
China's Dominance Hypothesis and the Emergence of a Tri-Polar Global Currency System (2014, neutral): “The theoretical basis for such a model can be found in the microstructure literature of FX markets, and more specifically the literature on announcement effects and asset prices (e.g. Andersen et al. 2003, Blinder et al. 2008).”
The Role of Central Bank Transparency for Guiding Private Sector Forecasts (2012, neutral): “The role of central bank transparency for private sector forecasts 1021 Capistrán and Timmermann (2009) go beyond the models that base different views of forecasters on differences in information sets.”