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Central Banks’ Communication Strategies: Just Words?

In: Contemporary Issues in Banking

Author

Listed:
  • Vincenzo Farina

    (University of Rome Tor Vergata)

  • Giuseppe Galloppo

    (University of Tuscia
    University of Rome Tor Vergata)

  • Daniele A. Previati

    (University Roma Tre)

Abstract

This chapter assesses the communication strategies of the Federal Reserve (FED) and the European Central Bank (ECB), as well as their respective effectiveness. We explore the multi-dimensional aspects of the information embedded in more than 800 statements released by the heads of the EU and US central banks. Using tools from computational linguistics, we analyse the information released by these central banks on the state of economic conditions, as well as the guidance they provide about future monetary policy decisions. First, this chapter looks at some dimensions of the communication (tone, growth, ambiguity). Subsequently, we pay attention to the scenario’s impact on the communication strategies of the ECB and FED, assessing whether these strategies are influenced by certain variables that depict the scenario of the financial and real economy. Our results confirm the title of this chapter: most of the time, there is no significant difference between the communication strategy of the FED or the ECB, whether or not there is an improvement in the economic variables under consideration. We found that changes in communication strategy are mainly linked to changes in the health of the financial system.

Suggested Citation

  • Vincenzo Farina & Giuseppe Galloppo & Daniele A. Previati, 2018. "Central Banks’ Communication Strategies: Just Words?," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Myriam García-Olalla & Judith Clifton (ed.), Contemporary Issues in Banking, chapter 0, pages 91-121, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-319-90294-4_5
    DOI: 10.1007/978-3-319-90294-4_5
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