Title: Central Bank communication: A comparative assessment.
Authors: Rossana Merola - ILO International Labour Office (Switzerland) [presenting]
Ekkehard Ernst - International Labour Organization (Switzerland)
Abstract: In the last decades, many central banks have started using communication as an instrument to manage agents expectations. Most of the literature so far has focused on the effects of central banks communication about interest rates, while limited research has been conducted on communication about other macroeconomic aspects. We fill this gap by analysing how central banks disclose information not only concerning interest rates, but also about other macroeconomic conditions. We empirically compare goals and strategies across several central banks (the US FED, the ECB, the Bank of Japan, the Bank of England, the Bank of Canada, the Reserve Bank of Australia and the South African Reserve Bank) over the period 1997-2016. Using the BIS collection of speeches by central bank senior executives, we select a list of keywords to estimate speech intensity in six different fields: monetary conditions, fiscal conditions, financial stability, external competitiveness, economic activity and labour and social issues. Our analysis is threefold. First, we assess whether announcements made by senior executives are mirrored in the policy decisions adopted by their respective central banks. Second, we identify which central banks are more likely to use communication to shape expectations. Third, we investigate whether communication strategy has changed during the crises. The comparison across the selected central banks highlights some insightful differences in strategies.