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More Than Words: A Textual Analysis of Monetary Policy Communication

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  • Pongsak Luangaram
  • Warapong Wongwachara

Abstract

This paper employs various tools from computational linguistics to monetary policy statements to gain exploratory insights into the nature of central bank communication. The sample was taken from a wide array of central banks, covering major central banks and others under the inflation-targeting (IT) regime, from 2000 to 2015. Three major aspects of communication were examined in this study, namely (i) *readability* – the ease with which a reader can understand a written text, (ii) *topics* – the key themes that are discussed in the policy statements, and (iii) *tones* – how positive/negative the outlook is in the central bank's language assessment.

Suggested Citation

  • Pongsak Luangaram & Warapong Wongwachara, 2017. "More Than Words: A Textual Analysis of Monetary Policy Communication," PIER Discussion Papers 54, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:54
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    References listed on IDEAS

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    Cited by:

    1. Thang Ngoc Doan & Dong Phu Do & Dat Van Luong, 2023. "Monetary stance and favorableness of the monetary policy in the media: the case of Vietnam," Journal of Asian Business and Economic Studies, Emerald Group Publishing Limited, vol. 31(2), pages 111-123, August.
    2. Haryo Kuncoro, 2021. "Central Bank Communication and Policy Interest Rate," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 76-91, January.
    3. Stefan Angrick & Naoyuki Yoshino, 2020. "From Window Guidance to Interbank Rates: Tracing the Transition of Monetary Policy in Japan and China," International Journal of Central Banking, International Journal of Central Banking, vol. 16(3), pages 279-316, June.
    4. repec:zbw:bofitp:2018_004 is not listed on IDEAS
    5. Haryo Kuncoro & Gatot Nazir Ahmad & Dianta Sebayang, 2021. "A textual analysis of central bank communication the case of Indonesia," Economics Bulletin, AccessEcon, vol. 41(3), pages 2158-2172.
    6. Xuefan, Pan, 2023. "Analysing the response of U.S. financial market to the Federal Open Market Committee statements and minutes based on computational linguistic approaches," Warwick-Monash Economics Student Papers 43, Warwick Monash Economics Student Papers.
    7. Babatunde Samson Omotosho, 2020. "Central Bank Communication In Ghana: Insights From A Text Mining Analysis," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 5(1), pages 01-13, January.
    8. Omotosho, Babatunde S. & Tumala, Mohammed M., 2019. "A Text Mining Analysis of Central Bank Monetary Policy Communication in Nigeria," MPRA Paper 98850, University Library of Munich, Germany.
    9. Joan Huang & John Simon, 2021. "Central Bank Communication: One Size Does Not Fit All," RBA Research Discussion Papers rdp2021-05, Reserve Bank of Australia.
    10. Arnold Segawa, 2021. "Causality Analysis of South Africa Reserve Bank’s Monetary Policy Statements and Communication," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(4), pages 55-74, October.
    11. Vyshnevskyi, Iegor & Jombo, Wytone & Sohn, Wook, 2024. "The clarity of monetary policy communication and financial market volatility in developing economies," Emerging Markets Review, Elsevier, vol. 59(C).
    12. Arnold Segawa, 2021. "Sentimental Outlook for the Monetary Policies of South African Reserve Bank," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(3), pages 37-56, July.
    13. Omotosho, Babatunde S., 2020. "Central Bank Communication during Economic Recessions: Evidence from Nigeria," MPRA Paper 99655, University Library of Munich, Germany.
    14. Michael McMahon & Mr. Alfred Schipke & Xiang Li, 2018. "China’s Monetary Policy Communication: Frameworks, Impact, and Recommendations," IMF Working Papers 2018/244, International Monetary Fund.
    15. Stefan Angrick & Naoyuki Yoshino, 2020. "From Window Guidance to Interbank Rates: Tracing the Transition of Monetary Policy in Japan and China," International Journal of Central Banking, International Journal of Central Banking, vol. 16(3), pages 279-316, June.

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    More about this item

    Keywords

    Monetary policy; Communication; Computational Linguistics;
    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

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