Does the Clarity of Monetary Policy Reports Reduce Volatility in Financial Markets?
Ales Bulir (),
Martin Cihak () and
Czech Journal of Economics and Finance (Finance a uver), 2018, vol. 68, issue 1, 2-17
We study whether increased clarity of central bank reports on monetary policy can reduce volatility of returns in financial markets. We measure clarity of reports by the Czech National Bank, the European Central Bank, the Bank of England, and Sveriges Riksbank using the Flesch-Kincaid grade level. In contrast to much of the recent literature, we find only limited evidence of a negative relationship between clarity of monetary policy reports and market volatility. We conclude that reducing volatility using clearer reports is not straightforward, especially in times of crisis.
Keywords: central bank communication; clarity; financial markets; monetary policy reports; volatility (search for similar items in EconPapers)
JEL-codes: E44 E52 E58 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:68:y:2018:i:1:p:2-17
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