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Chorus in the cacophony: Dissent and policy communication of India's Monetary Policy Committee

Author

Listed:
  • Rounak Sil

    (KPMG Global Services, India)

  • Unninarayanan Kurup
  • Ashima Goyal

    (Indira Gandhi Institute of Development Research)

  • Apoorva Singh and Rajendra Paramanik

    (Indian Institute of Technology, Patna)

Abstract

Using minutes of consecutive Monetary Policy Committee (MPC) meetings of the Indian central bank, we have constructed two novel measures of implicit dissent at the individual level as well as across groups. We have used VADER sentiment analysis to arrive at the proposed measures and investigated their influence on anchoring Indian growth and inflation forecasts. Our empirical findings show discordance amongst members increases forecast accuracy. This implies promoting an environment that supports nuanced opinions could improve policy outcomes.

Suggested Citation

  • Rounak Sil & Unninarayanan Kurup & Ashima Goyal & Apoorva Singh and Rajendra Paramanik, 2023. "Chorus in the cacophony: Dissent and policy communication of India's Monetary Policy Committee," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-03, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2023-03
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2023-003.pdf
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    References listed on IDEAS

    as
    1. Andrea Prat, 2005. "The Wrong Kind of Transparency," American Economic Review, American Economic Association, vol. 95(3), pages 862-877, June.
    2. Michael Ehrmann & Sylvester Eijffinger & Marcel Fratzscher, 2012. "The Role of Central Bank Transparency for Guiding Private Sector Forecasts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(3), pages 1018-1052, September.
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    5. Ashima Goyal & Prashant Parab, 2021. "Qualitative and quantitative Central Bank communications and professional forecasts: Evidence from India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2021-014, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. EllenE. Meade & David Stasavage, 2008. "Publicity of Debate and the Incentive to Dissent: Evidence from the US Federal Reserve," Economic Journal, Royal Economic Society, vol. 118(528), pages 695-717, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Monetary policy; Dissent; NLP; Supply shock; Linear Regression;
    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
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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