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Writing Clearly

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Author Info

  • Martin Cihák
  • Katerina Smídková
  • Ales Bulir

Abstract

The paper presents a methodology for measuring the clarity of central bank communication, illustrating it with the case of the European Central Bank (ECB) in 1999-2007. The analysis identifies the ECB''s written communication as clear about 95 percent of instances, which is comparable to, or even better than, other central banks for which a similar analysis is available. We also find that the additional information contained in the ECB''s Monthly Bulletins helps to improve communication clarity compared to ECB''s press releases. In particular, the Bulletins contain useful clarifying information on individual inflation factors and the overall forecast risk; in contrast, the bulletin''s communication on monetary shocks has a negative, albeit small, impact on clarity.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/252.

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Length: 34
Date of creation: 01 Oct 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/252

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Related research

Keywords: European Central Bank; Central bank policy; External shocks; inflation; monetary policy; central bank; inflation forecasts; inflation target; aggregate demand; monetary policy decisions; monetary fund; monetary analysis; price stability; money growth; monetary policy framework; inflation rate; monetary aggregates; national bank; monetary policy strategy; inflation targeting; real interest rate; monetary policy transparency; monetary shocks; monetary economics; foreign exchange; expectations of inflation; actual inflation; monetary sector; money market; inflation-targeting; long-term interest rates; monetary growth; average inflation; rate of inflation; price level; inflation targeting framework; monetary stance; measure of inflation; inflation objective; financial stability; variable inflation; optimal monetary policy; monetary indicators; inflation dynamics; nominal interest rate; inflation response;

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References

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  1. Ehrmann, Michael & Fratzscher, Marcel, 2005. "How should central banks communicate?," Working Paper Series 0557, European Central Bank.
  2. S Derlind, Paul & S Derstr M, Ulf & Vredin, Anders, 2005. "Dynamic Taylor Rules And The Predictability Of Interest Rates," Macroeconomic Dynamics, Cambridge University Press, vol. 9(03), pages 412-428, June.
  3. Christian Conrad & Michael J. Lamla, 2007. "The High-Frequency Response of the EUR-US Dollar Exchange Rate to ECB Monetary Policy Announcements," KOF Working papers 07-174, KOF Swiss Economic Institute, ETH Zurich.
  4. Svensson, Lars E.O., 1997. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," Seminar Papers 615, Stockholm University, Institute for International Economic Studies.
  5. Barbara Roffia & Andrea Zaghini, 2008. "Excess money growth and inflation dynamics," Temi di discussione (Economic working papers) 657, Bank of Italy, Economic Research and International Relations Area.
  6. Podpiera, Jiri­, 2008. "Monetary policy inertia reconsidered: Evidence from endogenous interest rate trajectory," Economics Letters, Elsevier, vol. 100(2), pages 238-240, August.
  7. Nicoletta Batini & Andrew G Haldane, 1999. "Forward-looking rules for monetary policy," Bank of England working papers 91, Bank of England.
  8. Coffinet, Jerome & Gouteron, Sylvain, 2007. "Euro area market reactions to the monetary developments press release," Working Paper Series 0792, European Central Bank.
  9. Robert Tchaidze & Alina Carare, 2005. "The Use and Abuse of Taylor Rules," IMF Working Papers 05/148, International Monetary Fund.
  10. Athanasios Orphanides & Spencer Dale & Pär Österholm, 2008. "Imperfect Central Bank Communication," IMF Working Papers 08/60, International Monetary Fund.
  11. Berger, Helge & Ehrmann, Michael & Fratzscher, Marcel, 2006. "Forecasting ECB monetary policy: accuracy is (still) a matter of geography," Working Paper Series 0578, European Central Bank.
  12. Michael Ehrmann & Marcel Fratzscher & Helge Berger, 2006. "Forecasting ECB Monetary Policy," IMF Working Papers 06/41, International Monetary Fund.
  13. Richard Dennis & John C. Williams, 2007. "Monetary policy, transparency, and credibility: conference summary," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may25.
  14. Katerina Smidkova, 2003. "Targeting Inflation under Uncertainty: Policy Makers’ Perspective," Macroeconomics 0304003, EconWPA.
  15. Katerina Smídková & Viktor Kotlán & David Navrátil & Ales Bulir, 2008. "Inflation Targeting and Communication," IMF Working Papers 08/234, International Monetary Fund.
  16. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
  17. David-Jan Jansen & Jakob de Haan, 2007. "The Importance of Being Vigilant: Has ECB Communication Influenced Euro Area Inflation Expectations?," DNB Working Papers 148, Netherlands Central Bank, Research Department.
  18. Spencer Dale & Athanasios Orphanides & Pär Österholm, 2011. "Imperfect Central Bank Communication: Information versus Distraction," International Journal of Central Banking, International Journal of Central Banking, vol. 7(2), pages 3-39, June.
  19. Carlo Rosa & Giovanni Verga, 2005. "Is ECB Communication Effective?," CEP Discussion Papers dp0682, Centre for Economic Performance, LSE.
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Citations

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Cited by:
  1. Ales Bulir & David-Jan Jansen & Martin Cihák, 2012. "Clarity of Central Bank Communication About Inflation," IMF Working Papers 12/9, International Monetary Fund.
  2. Allard, Julien & Catenaro, Marco & Vidal, Jean-Pierre & Wolswijk, Guido, 2012. "Central bank communication on fiscal policy," Working Paper Series 1477, European Central Bank.

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