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The Art of Central Bank Communication: A Topic Analysis on Words used by the Bank of Japan's Governors

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  • Masayuki KEIDA
  • Yosuke TAKEDA

Abstract

This paper addresses the art of central bank communication, in a semantic analysis which applies a topic model to the regular press conference documents of the Bank of Japan (BOJ)'s Gov. Masaaki Shirakawa and Gov. Haruhiko Kuroda. Based on the standard method of latent Dirichlet allocation (LDA) in the statistical natural language processing literature, our research on the communication strategies that the BOJ pursued under two governorships using over 70 press conference documents indicates significant differences between the Shirakawa and Kuroda governorships in terms of topic distribution. In early 2016, when the negative interest rate policy was introduced during the era of Kuroda's governorship, the ratio of "policy goal" topics decreased dramatically, despite being an essential feature of Gov. Kuroda's vocabulary relative to Gov. Shirakawa to that point in time. Since the ambiguity in the words of the governors is contained in "discretionary" topics, which include to strengthen, to confront, to recognize, to plan and so forth, the communication strategy in the Shirakawa governorship was considered "Delphic" in that the semantic ambiguity may reveal bad fundamental conditions concerning the Japanese economy.

Suggested Citation

  • Masayuki KEIDA & Yosuke TAKEDA, 2019. "The Art of Central Bank Communication: A Topic Analysis on Words used by the Bank of Japan's Governors," Discussion papers 19038, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:19038
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    References listed on IDEAS

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    3. Piotr Misztal, 2022. "Communication of Central Banks as a Determinant of Credibility and Effectiveness of Monetary Policy," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 539-554.

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