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Language, Expectations, and Circumstances

Elke Muchlinski ()

Chapter 5 in Central Banks and Coded Language, 2011, pp 199-223 from Palgrave Macmillan

Abstract: Abstract In this chapter I would like to provide an introduction to language as opposed to a coded language. This chapter tries to show why understanding matters to central banking. According to modern central bank literature, the genuine task of a central bank is to steer market expectations. Since expectations and the expectation-building process are not to be regarded as mental states but rather as articulations (utterances) configured by language-based interactions in different circumstances, central bank talks matter. However, expectations are neither linearly determined causal responses to stimuli nor causal connections to disclosed information. Economics, as a social science and as institutionalized procedure, is not based on causality as is typical for mechanical stimulus-responses. This is also true regarding understanding.

Keywords: Monetary Policy; Financial Market; Central Bank; Code Word; Picture Theory (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1057/9780230305960_6

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Handle: RePEc:pal:palchp:978-0-230-30596-0_6