US monetary policy since the 1950s and the changing content of FOMC minutes

Pierre Siklos

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Content analysis is used to analyze 60 years of FOMC minutes. Since there is no unique algorithm to quantify content two different algorithms are applied. Wordscores compares content relative to a chosen benchmark while DICTION is an alternative algorithm that is specifically designed to capture various elements that capture the sentiment or tone conveyed in a text. The resulting indicators are then incorporated into a VAR. The content of FOMC minutes is found to be significantly related to the state of the economy, notably real GDP growth and changes in the fed funds rate. However, the relationship between content and macroeconomic conditions changes after 1993 when minutes are made public with a lag. Both content indicators also suggest substantive changes in the content of FOMC minutes since the 1950s in terms of the FOMC’s dovishness or hawkishness.

Keywords: FOMC minutes; Wordscores; DICTION; monetary policy stance; vector autoregression (search for similar items in EconPapers)
JEL-codes: E31 E37 E52 E58 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2019-09
New Economics Papers: this item is included in nep-big, nep-cba, nep-mac and nep-mon
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https://cama.crawford.anu.edu.au/sites/default/fil ... 9/69_2019_siklos.pdf (application/pdf)

Related works:
Journal Article: U.S. Monetary Policy since the 1950s and the Changing Content of FOMC Minutes (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-69

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