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Deciphering Monetary Policy Board Minutes through Text Mining Approach: The Case of Korea

Author

Listed:
  • Ki Young Park

    (School of Economics, Yonsei University)

  • Youngjoon Lee

    (School of Business, Yonsei University)

  • Soohyon Kim

    (Economic Research Institute, The Bank of Korea)

Abstract

We quantify the Monetary Policy Board (MPB) minutes of the Bank of Korea (BOK) using text mining. We propose a novel approach using a field-specific Korean dictionary and contiguous sequences of words (n-grams) to better capture the subtlety of central bank communications. We find that our lexicon-based indicators help explain the current and future BOK monetary policy decisions when considering an augmented Taylor rule, suggesting that they contain additional information beyond the currently available macroeconomic variables. Our indicators remarkably outperform English-based textual classifications, a media-based measure of economic policy uncertainty, and a data-based measure of macroeconomic uncertainty. Our empirical results also emphasize the importance of using a field-specific dictionary and the original Korean text.

Suggested Citation

  • Ki Young Park & Youngjoon Lee & Soohyon Kim, 2019. "Deciphering Monetary Policy Board Minutes through Text Mining Approach: The Case of Korea," Working Papers 2019-1, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:1901
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    File URL: http://papers.bok.or.kr/RePEc_attach/wpaper/english/wp-2019-1.pdf
    File Function: Working Paper, 2019
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    More about this item

    Keywords

    Monetary policy; Text mining; Central banking; Bank of Korea; Taylor rule;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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