The Central Bank Crystal Ball: Temporal information in monetary policy communication

David Byrne, Robert Goodhead, Michael McMahon and Conor Parle

No 17930, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Effective central bank communication provides information that the public wants but does not have. Using a new textual methodology to quantify the temporal information in central bank communication, we argue that central bank assessments of the (latent) state of the economy can be the source of the public's information deficit, rather than superior information necessarily. The implication of this is that communication of a single, fixed, reaction function, even if desirable, is likely impossible even if preferences remain fixed over time. Communication of how the central bank is assessing the economy should be emphasised in addition to any forward guidance.

Keywords: Communication (search for similar items in EconPapers)
JEL-codes: C55 E52 E58 (search for similar items in EconPapers)
Date: 2023-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17930 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: The Central Bank Crystal Ball: Temporal information in monetary policy communication (2023)
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:cpr:ceprdp:17930

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17930

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().