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Clarity of Central Bank Communication About Inflation

Author Info

Listed author(s):
  • Ales Bulir
  • David-Jan Jansen
  • Martin Cihak

Abstract

This paper examines whether the clarity of central bank communication about inflation has changed with the economic environment. We use readability statistics and content analysis to study the clarity of communication on the inflation outlook by seven central banks between 1997 and 2010. Overall, we find no strong indications that central banks were less clear in explaining their policies when faced with higher uncertainty or a less favorable inflation outlook. The global financial crisis, however, did have a negative impact on clarity of central bank communication.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/9.

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Length: 24
Date of creation: 01 Jan 2012
Handle: RePEc:imf:imfwpa:12/9
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Keywords: Central banks; Inflation; Monetary policy; Public information notices; Transparency; communication; clarity; central bank; inflation target;

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Find related papers by JEL classification:
  • 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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  1. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
  2. Ales Bulír & Martin Cihák & David-Jan Jansen, 2011. "Clarity of Central Bank Communication About Inflation," DNB Working Papers 333, Netherlands Central Bank, Research Department.
  3. Benjamin Born & Michael Ehrmann & Marcel Fratzscher, 2014. "Central Bank Communication on Financial Stability," Economic Journal, Royal Economic Society, vol. 124(577), pages 701-734, 06.
  4. Tiff Macklem, 2005. "Commentary : central bank communication and policy effectiveness," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 475-494.
  5. Alan S. Blinder, 2008. "Talking about Monetary Policy: The Virtues (and Vices?) of Central Bank Communication," Working Papers 1048, Princeton University, Department of Economics, Center for Economic Policy Studies..
  6. Katerina Smídková & Viktor Kotlán & David Navrátil & Ales Bulir, 2008. "Inflation Targeting and Communication; It Pays Off to Read Inflation Reports," IMF Working Papers 08/234, International Monetary Fund.
  7. Eijffinger, Sylvester C.W. & Geraats, Petra M., 2006. "How transparent are central banks?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 1-21, March.
  8. repec:pri:cepsud:161blinder is not listed on IDEAS
  9. Jansen, David-Jan, 2011. "Mumbling with great incoherence: Was it really so difficult to understand Alan Greenspan?," Economics Letters, Elsevier, vol. 113(1), pages 70-72, October.
  10. Michael Woodford, 2005. "Central bank communication and policy effectiveness," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 399-474.
  11. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
  12. Malcolm D. Knight & Chair, 2005. "General discussion : central bank communication and policy effectiveness," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 495-505.
  13. Martin Cihak & Katerina Smídková & Ales Bulir, 2008. "Writing Clearly; ECB’s Monetary Policy Communication," IMF Working Papers 08/252, International Monetary Fund.
  14. Sònia Muñoz & Samir Jahjah & Martin Cihak & Sharika Teh Sharifuddin & Kalin I Tintchev, 2012. "Financial Stability Reports; What Are they Good for?," IMF Working Papers 12/1, International Monetary Fund.
  15. Petra Gerlach-Kristen, 2004. "Is the MPC's Voting Record Informative about Future UK Monetary Policy?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 299-313, 06.
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Cited by:

  1. Ales Bulír & Martin Cihák & David-Jan Jansen, 2011. "Clarity of Central Bank Communication About Inflation," DNB Working Papers 333, Netherlands Central Bank, Research Department.
  2. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
  3. Pierre L. Siklos, 2013. "The Global Financial Crisis and the Language of Central Banking: Central Bank Guidance in Good Times and in Bad," CAMA Working Papers 2013-58, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. 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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