Let's face it: Quantifying the impact of nonverbal communication in FOMC press conferences

Filippo Curti and Sophia Kazinnik

Journal of Monetary Economics, 2023, vol. 139, issue C, 110-126

Abstract: When the Fed Chair speaks, investors not only listen, but also watch. To demonstrate this phenomenon, we apply facial recognition analysis to FOMC press conference videos and quantify one of the most important aspects of nonverbal communication - facial expressions. Using minute-level data, we align our nonverbal communication measure with a set of financial assets to estimate the impact of the Fed Chairs’ facial expressions on investor expectations. We find that investors adversely react to negative expressions revealed during the press conference, even when controlling for the verbal component of the press conference and other explanatory variables.

Keywords: Central bank communication; Market expectations; Behavioral finance; Facial recognition; Video data; Machine learning (search for similar items in EconPapers)
JEL-codes: E52 E58 F33 G12 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393223000740
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:139:y:2023:i:c:p:110-126

DOI: 10.1016/j.jmoneco.2023.06.007

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().