Strategic Central Bank Communication: Discourse and Game-Theoretic Analyses of the Bank of Japan's Monthly Report

Kohei Kawamura, Yohei Kobashi, Masato Shizume and Kozo Ueda
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Kohei Kawamura: University of Edinburgh
Yohei Kobashi: Waseda University

No 62, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: We conduct a discourse analysis of the Bank of Japan's Monthly Report and examine its characteristics in relation to business cycles. We find that the difference between the number of positive and negative expressions in the reports leads the leading index of the economy by approximately three months, which suggests that the central bank's reports have some superior information about the state of the economy. Moreover, ambiguous expressions tend to appear more frequently with negative expressions. Using a simple persuasion game, we argue that the use of ambiguity in communication by the central bank can be seen as strategic information revelation when the central bank has an incentive to bias the reports (and hence beliefs in the market) upwards.

Keywords: monetary policy; transparency; natural language processing; modality; latent Dirichlet allocation (LDA); verifiable disclosure model (search for similar items in EconPapers)
JEL-codes: D78 D82 E58 E61 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2016-03
New Economics Papers: this item is included in nep-gth and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Strategic central bank communication: discourse and game-theoretic analyses of the Bank of Japan's Monthly Report (2016)
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