Has the Clarity of Humphrey-Hawkins Testimonies Affected Volatility in Financial Markets?

David-Jan Jansen ()

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: By applying readability statistics to the Humphrey-Hawkins testimonies given by the Federal Reserve Chairman, I test whether the clarity of central bank communication affects volatility in financial markets. There are three key results. First, when clarity matters, the results are unequivocal: clarity diminishes volatility. Second, clarity of communication matters mostly for volatility of medium-term interest rates. Third, the effects of clarity vary over time. Clarity mattered especially, but not exclusively during Alan Greenspan's term at the Federal Reserve. Overall, the analysis shows the importance of transparent communication on monetary policy.

Keywords: central bank communication; transparency; readability; financial markets; volatility (search for similar items in EconPapers)
JEL-codes: F15 F42 J60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mon
Date: 2008-11
View list of references

Downloads: (external link)
http://www.dnb.nl/binaries/Working%20Paper%20No%20185-2008_tcm46-202521.pdf (application/pdf)

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: http://EconPapers.repec.org/RePEc:dnb:dnbwpp:185

Access Statistics for this paper

More papers in DNB Working Papers from Netherlands Central Bank, Research Department
Contact information at EDIRC.
Series data maintained by Arjen Siegmann ().