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More Than Words: Fed Chairs' Communications During Congressional Testimonies


  • Michelle Alexopoulos
  • Xinfen Han
  • Oleksiy Kryvtsov
  • Xu Zhang


We study soft information contained in congressional testimonies by the Federal Reserve Chairs and analyze its effects on financial markets. Using machine learning, we construct high-frequency measures of Fed Chairs' and Congress members' emotions expressed via their words, voice and face. Increases in the Chair's text-, voice-, or face-emotion indices during the testimony generally raise the S&P500 index and lower the VIX. Stock prices are particularly sensitive to both the members' questions and the Fed Chair's answers about issues directly related to monetary policy. These effects add up and propagate after the testimony, reaching magnitudes comparable to those after a policy rate cut. Our findings resonate with the view in psychology that communication is much more than words and underscore the need for a holistic approach to central bank communication.

Suggested Citation

  • Michelle Alexopoulos & Xinfen Han & Oleksiy Kryvtsov & Xu Zhang, 2022. "More Than Words: Fed Chairs' Communications During Congressional Testimonies," Working Papers tecipa-737, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-737

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    References listed on IDEAS

    1. Ehrmann, Michael & Talmi, Jonathan, 2020. "Starting from a blank page? Semantic similarity in central bank communication and market volatility," Journal of Monetary Economics, Elsevier, vol. 111(C), pages 48-62.
    2. Dietrich, Bryce J. & Enos, Ryan D. & Sen, Maya, 2019. "Emotional Arousal Predicts Voting on the U.S. Supreme Court," Political Analysis, Cambridge University Press, vol. 27(2), pages 237-243, April.
    3. Cieslak, Anna & Schrimpf, Andreas, 2019. "Non-monetary news in central bank communication," Journal of International Economics, Elsevier, vol. 118(C), pages 293-315.
    4. repec:cup:apsrev:v:113:y:2019:i:04:p:941-962_00 is not listed on IDEAS
    5. Dietrich, Bryce J. & Hayes, Matthew & O’Brien, Diana Z., 2019. "Pitch Perfect: Vocal Pitch and the Emotional Intensity of Congressional Speech," American Political Science Review, Cambridge University Press, vol. 113(4), pages 941-962, November.
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    Cited by:

    1. Dimitrios Kanelis & Pierre L. Siklos, 2022. "Emotion in Euro Area Monetary Policy Communication and Bond Yields: The Draghi Era," CQE Working Papers 10322, Center for Quantitative Economics (CQE), University of Muenster.

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    More about this item


    Central bank communications; Financial markets; High-frequency identification; Facial emotion recognition; Vocal signal processing; Textual Analysis;
    All these keywords.

    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
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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