Monetary policy communication and inflation expectations: New evidence about tone and readability
We contribute new empirical evidence on monetary policy communication and inflation expectations by firms. First, we construct a new indicator of the perceived tone of monetary policy communication that complements traditional indicators of the effective tone. Both have the expected negative sign an...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2023-09-01
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| Series: | Latin American Journal of Central Banking |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2666143823000054 |
| _version_ | 1797680785557291008 |
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| author | Gianni Carotta Miguel Mello Jorge Ponce |
| author_facet | Gianni Carotta Miguel Mello Jorge Ponce |
| author_sort | Gianni Carotta |
| collection | DOAJ |
| description | We contribute new empirical evidence on monetary policy communication and inflation expectations by firms. First, we construct a new indicator of the perceived tone of monetary policy communication that complements traditional indicators of the effective tone. Both have the expected negative sign and are statistically significant in panel data regressions with firms’ inflation expectations as the dependent variable, suggesting that communication has an important effect over inflation expectations. We also compute readability and perspicuity indicators of the communications. Better readability of monetary policy communication reinforces the effect of the tone. Impact is larger when combined with the indicator of effective tone, suggesting that readability is an important component in monetary policy communication. |
| first_indexed | 2024-03-11T23:35:19Z |
| format | Article |
| id | doaj.art-c8f56be80c2a478d869e1870832295e1 |
| institution | Directory Open Access Journal |
| issn | 2666-1438 |
| language | English |
| last_indexed | 2024-03-11T23:35:19Z |
| publishDate | 2023-09-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Latin American Journal of Central Banking |
| spelling | doaj.art-c8f56be80c2a478d869e1870832295e12023-09-20T04:21:52ZengElsevierLatin American Journal of Central Banking2666-14382023-09-0143100088Monetary policy communication and inflation expectations: New evidence about tone and readabilityGianni Carotta0Miguel Mello1Jorge Ponce2Banco Central del Uruguay, UruguayCorresponding author.; Banco Central del Uruguay, UruguayBanco Central del Uruguay, Uruguay; dECON-FCS-UdelaR, UruguayWe contribute new empirical evidence on monetary policy communication and inflation expectations by firms. First, we construct a new indicator of the perceived tone of monetary policy communication that complements traditional indicators of the effective tone. Both have the expected negative sign and are statistically significant in panel data regressions with firms’ inflation expectations as the dependent variable, suggesting that communication has an important effect over inflation expectations. We also compute readability and perspicuity indicators of the communications. Better readability of monetary policy communication reinforces the effect of the tone. Impact is larger when combined with the indicator of effective tone, suggesting that readability is an important component in monetary policy communication.http://www.sciencedirect.com/science/article/pii/S2666143823000054C23E52E58 |
| spellingShingle | Gianni Carotta Miguel Mello Jorge Ponce Monetary policy communication and inflation expectations: New evidence about tone and readability Latin American Journal of Central Banking C23 E52 E58 |
| title | Monetary policy communication and inflation expectations: New evidence about tone and readability |
| title_full | Monetary policy communication and inflation expectations: New evidence about tone and readability |
| title_fullStr | Monetary policy communication and inflation expectations: New evidence about tone and readability |
| title_full_unstemmed | Monetary policy communication and inflation expectations: New evidence about tone and readability |
| title_short | Monetary policy communication and inflation expectations: New evidence about tone and readability |
| title_sort | monetary policy communication and inflation expectations new evidence about tone and readability |
| topic | C23 E52 E58 |
| url | http://www.sciencedirect.com/science/article/pii/S2666143823000054 |
| work_keys_str_mv | AT giannicarotta monetarypolicycommunicationandinflationexpectationsnewevidenceabouttoneandreadability AT miguelmello monetarypolicycommunicationandinflationexpectationsnewevidenceabouttoneandreadability AT jorgeponce monetarypolicycommunicationandinflationexpectationsnewevidenceabouttoneandreadability |