Risk and uncertainty in central bank signals
Matthias Klaes and
Alberto Montagnoli ()
No 023/2008, SCEME Working Papers: Advances in Economic Methodology from SCEME
This paper considers the signalling aspect of monetary policy. We introduce a heuristic framework for the study of signal uncertainty, and use this to analyses the signal uncertainty implicit in the communications of the Bank of England’s Monetary Policy Committee (MPC). Our findings suggest that frequencies of key terms expressing signal uncertainty in MPC minutes may either reflect the degree of confidence implicit in MPC deliberations, or offer evidence for the presence of an irreducible kind of signal uncertainty that shows up as white noise, casting doubt on the soundness of the various qualitative uncertainty indices found in the literature.
Keywords: MPC; signal uncertainty; central bank uncertainty; word frequencies; uncertainty index; seasonality (search for similar items in EconPapers)
JEL-codes: D81 E12 E52 E58 (search for similar items in EconPapers)
Pages: 44 pages
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:sti:wpaper:023/2008
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