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Has Monetary Policy Changed? How the Crisis Shifted the Ground Under Central Banks

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  • Pierre L. Siklos

    (Department of Economics, Wilfrid Laurier University, Canada; Balsillie School of International Affairs, Canada; Rimini Centre for Economic Analysis)

Abstract

Central bank communication is more important than only a decade ago. This paper examines the results of a Survey begun in 2013, in cooperation with the BIS, to assess how and why central bank communication strategies have changed in light of the financial crisis of 2008-10. Existing metrics of central bank transparency are found to be relatively less informative about the role of financial stability in transparency. Inflation targeting central banks are more likely to incorporate market reactions to their policies and place greater weight on the modelling exercise used to generate macroeconomic forecasts. Central banks also believe that forward guidance is beneficial. Inflation targeting central banks are also more vocal in publicly explaining the role and function of macroprudential tools. Few differences in views about communicating in normal versus crisis times are observed. Therefore, communicating in normal versus crisis times are not seen as being very different.

Suggested Citation

  • Pierre L. Siklos, 2018. "Has Monetary Policy Changed? How the Crisis Shifted the Ground Under Central Banks," Working Paper series 18-10, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:18-10
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    References listed on IDEAS

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    1. Dominguez, Kathryn M.E. & Hashimoto, Yuko & Ito, Takatoshi, 2012. "International reserves and the global financial crisis," Journal of International Economics, Elsevier, vol. 88(2), pages 388-406.
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    3. Pierre L. Siklos, 2014. "Communications Challenges for Multi-Tasking Central Banks: Evidence, Implications," International Finance, Wiley Blackwell, vol. 17(1), pages 77-98, March.
    4. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
    5. Christopher J. Neely, 2014. "Lessons from the taper tantrum," Economic Synopses, Federal Reserve Bank of St. Louis, issue 2.
    6. Siklos,Pierre L. & Bohl,Martin T. & Wohar,Mark E. (ed.), 2010. "Challenges in Central Banking," Cambridge Books, Cambridge University Press, number 9780521199292, September.
    7. Benjamin Born & Michael Ehrmann & Marcel Fratzscher, 2014. "Central Bank Communication on Financial Stability," Economic Journal, Royal Economic Society, vol. 124(577), pages 701-734, June.
    8. Lombardi, Domenico & Siklos, Pierre L., 2016. "Benchmarking macroprudential policies: An initial assessment," Journal of Financial Stability, Elsevier, vol. 27(C), pages 35-49.
    9. Siklos, Pierre L., 2017. "Central Banks into the Breach: From Triumph to Crisis and the Road Ahead," OUP Catalogue, Oxford University Press, number 9780190228835.
    10. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
    11. repec:pri:cepsud:161blinder is not listed on IDEAS
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    Cited by:

    1. Michael Ehrmann & Sarah Holton & Danielle Kedan & Gillian Phelan, 2024. "Monetary Policy Communication: Perspectives from Former Policymakers at the ECB," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(4), pages 837-864, June.
    2. Reid, Monique & Siklos, Pierre & Guetterman, Timothy & Du Plessis, Stan, 2021. "The role of financial journalists in the expectations channel of the monetary transmission mechanism," Research in International Business and Finance, Elsevier, vol. 55(C).
    3. Monique Reid & Pierre Siklos, 2020. "Building Credibility and Influencing Expectations The Evolution of Central Bank Communication," Working Papers 10144, South African Reserve Bank.
    4. 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.

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    More about this item

    Keywords

    central bank communication; transparency; forward guidance; quantitative easing; macroprudential tools;
    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
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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