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Strategic central bank communication: discourse and game-theoretic analyses of the Bank of Japan's Monthly Report

Author

Listed:
  • Kohei Kawamura
  • Yohei Kobashi
  • Masato Shizume
  • Kozo Ueda

Abstract

We conduct a discourse analysis of the Bank of Japan's Monthly Report and examine its characteristics in relation to business cycles. We find that the difference between the number of positive and negative expressions in the reports leads the leading index of the economy by approximately three months, which suggests that the central bank' reports have some superior information about the state of the economy. Moreover, ambiguous expressions tend to appear more frequently with negative expressions. Using a simple persuasion game, we argue that the use of ambiguity in communication by the central bank can be seen as strategic information revelation when the central bank has an incentive to bias the reports (and hence beliefs in the market) upwards.

Suggested Citation

  • Kohei Kawamura & Yohei Kobashi & Masato Shizume & Kozo Ueda, 2016. "Strategic central bank communication: discourse and game-theoretic analyses of the Bank of Japan's Monthly Report," CAMA Working Papers 2016-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2016-11
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    References listed on IDEAS

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    Cited by:

    1. Irving Fisher Committee, 2017. "Big Data," IFC Bulletins, Bank for International Settlements, number 44, July.
    2. Donato Masciandaro & Oana Peia & Davide Romelli, 2022. "Central Bank Communication and Social Media: From Silence to Twitter," BAFFI CAREFIN Working Papers 22187, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    3. Donato Masciandaro & Davide Romelli & Gaia Rubera, 2021. "Monetary policy, Twitter and financial markets: evidence from social media traffic," BAFFI CAREFIN Working Papers 21160, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    4. Giuseppe Bruno, 2017. "Central Bank Communications: information extraction and semantic analysis," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Big Data, volume 44, Bank for International Settlements.
    5. repec:hal:spmain:info:hdl:2441/jpcu0knbl80rpibin9slrlrlb is not listed on IDEAS
    6. Mario Gonzalez & Raul Cruz Tadle, 2021. "Monetary Policy Press Releases: An International Comparison," Working Papers Central Bank of Chile 912, Central Bank of Chile.
    7. Eisl, Andreas, 2020. "The ambiguous consensus on fiscal rules: How ideational ambiguity has facilitated social democratic parties' support of structural deficit rules in the eurozone," MaxPo Discussion Paper Series 20/4, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).
    8. Andreas Eisl, 2020. "The Ambiguous Consensus on Fiscal Rules: How Ideational Ambiguity Has Facilitated Social Democratic Parties’ Support of Structural Deficit Rules in the Eurozone," Sciences Po publications 20/4, Sciences Po.
    9. Andreas Eisl, 2020. "The Ambiguous Consensus on Fiscal Rules," Working Papers hal-03053976, HAL.
    10. Donato Masciandaro & Davide Romelli & Gaia Rubera, 2020. "Tweeting on Monetary Policy and Market Sentiments: The Central Bank Surprise Index," BAFFI CAREFIN Working Papers 20134, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    11. Donato Masciandaro & Davide Romelli & Gaia Rubera, 2021. "Monetary policy and financial markets: evidence from Twitter traffic," BAFFI CAREFIN Working Papers 21160, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    12. Donato Masciandaro & Davide Romelli, 2016. "From Silence to Voice: Monetary Policy, Central Bank Governance and Communication," BAFFI CAREFIN Working Papers 1627, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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    More about this item

    Keywords

    Monetary policy; transparency; natural language processing; modality; latent Dirichlet allocation (LDA); verifiable disclosure model;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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