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Central Bank Communication about Climate Change

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Abstract

This paper applies natural language processing to a large corpus of central bank speeches to identify those related to climate change. We analyze these speeches to better understand how central banks communicate about climate change. By all accounts, communication about climate change has accelerated sharply in recent years. The breadth of topics covered is wide, ranging from the impact of climate change on the economy to financial innovation, sustainable finance, monetary policy, and the central bank mandate. Financial stability concerns are touched upon, but macroprudential policy is rarely mentioned. Direct central bank action largely revolves around identifying and monitoring potential risks to the financial system. Finally, we find that central banks tend to use speculative language more frequently when talking about climate change relative to other topics.

Suggested Citation

  • David M. Arseneau & Alejandro Drexler & Mitsuhiro Osada, 2022. "Central Bank Communication about Climate Change," Finance and Economics Discussion Series 2022-031, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2022-31
    DOI: 10.17016/FEDS.2022.031
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    File URL: https://www.federalreserve.gov/econres/feds/files/2020031pap.pdf
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    1. Bodenstein, Martin & Guerrieri, Luca & Gust, Christopher J., 2013. "Oil shocks and the zero bound on nominal interest rates," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 941-967.
    2. Callum Jones & Thomas Philippon & Venky Venkateswaran, 2021. "Optimal Mitigation Policies in a Pandemic: Social Distancing and Working from Home [A simple planning problem for covid-19 lockdown]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5188-5223.
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    Cited by:

    1. Antoine Ebeling, 2024. "ECB’s Climate Speeches and Market Reactions," Working Papers of BETA 2024-38, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Feldkircher, Martin & Teliha, Viktoriya, 2024. "Speeches in the green: The political discourse of green central banking," Energy Economics, Elsevier, vol. 135(C).
    3. Fischer, Lion & Rapp, Marc Steffen & Zahner, Johannes, 2024. "Central banks sowing the seeds for a green financial sector? NGFS membership and market reactions," IMFS Working Paper Series 198, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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    More about this item

    Keywords

    Financial stability; Transparency; Central bank mandate; Green finance; Natural language processing; Central bank speeches;
    All these keywords.

    JEL classification:

    • 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
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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