Monetary Policy in the Media

Berger, Helge; Ehrmann, Michael; Fratzscher, Marcel

doi:10.1111/j.1538-4616.2011.00392.x

Cited by 84 publications

(65 citation statements)

References 27 publications

(31 reference statements)

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“…For example, Ehrmann and Fratzscher (2007) examine the communication strategies of the ECB, Bank of England and the Federal Reserve; Ranaldo and Rossi (2010) examines the financial market effects of Swiss National Bank announcements; Hayo and Neuenkirch (2010) considers the predictability of future Fed rates using information in announcements; Berger, Ehrmann, and Fratzscher (2011) looks at the ECB and media reaction; and Hayo, Kutan, and Neuenkirch (2012) focuses on asset market reactions to Fed communications.…”

Section: Introductionmentioning

confidence: 99%

Shocking language: Understanding the macroeconomic effects of central bank communication

Hansen

McMahon

2016

Journal of International Economics

241

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We explore how the multi-dimensional aspects of information released by the FOMC has effects on both market and real economic variables. Using tools from computational linguistics, we measure the information released by the FOMC on the state of economic conditions, as well as the guidance the FOMC provides about future monetary policy decisions. Employing these measures within a FAVAR framework, we find that shocks to forward guidance are more important than the FOMC communication of current economic conditions in terms of their effects on market and real variables. Nonetheless, neither communication has particularly strong effects on real economic variables. JEL Codes: E52, E58 * We have benefited from comments during the ISOM conference in Zurich, and seminars at the National University of Singapore and the IMF. We would like to especially thank Martin Bodenstein, James Cloyne, Carlo Favero, Paul Hubert, Oscar Jorda, Christian Julliard, Dimitris Korobilis, Francesca Monti, Helene Rey and Francisco Ruge-Murcia for insightful comments, suggestions and discussions. Paul Soto and Marcel Schlepper provided excellent research assistance. Part of this work was completed when both authors were Houblon-Norman Fellows at the Bank of England. Michael is currently based at the IMF-STI. The views expressed in this paper are those of the authors and do not necessarily represent those of anyone at the Bank of England, the IMF or IMF policy. We also benefited from a British Academy small grant. Any errors remain ours alone.

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Section: Introductionmentioning

confidence: 99%

Shocking language: Understanding the macroeconomic effects of central bank communication

Hansen

McMahon

2016

Journal of International Economics

241

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“…In a study of the European Central Bank, Berger et al. () find that while real economic conditions influence reporting, “ECM communications—in particular, through its press conference on meeting days is able to influence both the extent and the favorability of the media's coverage of its decisions.” Konstantinou and Tagkalakis () find evidence that expansionary fiscal policy improves business and consumer confidence and suggest that this improvement should be viewed as secondary goal of such interventions. This idea that the government's media presence can affect economic sentiment has long been recognized—even during the Great Depression, the Roosevelt administration oversaw a significant media campaign to sell the economic policies that were being put in place to fight the contraction…”

Section: Discussionmentioning

confidence: 99%

The Contractionary Effect of Bad Economic News

He¹

2017

J of Money Credit Banking

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Is bad economic news a self‐fulfilling prophecy? This paper examines the local employment effects of exposure to pessimistic economic news. By combining detailed data on newspaper subscriptions with a tabulation of negative newspaper stories, the flow of such news across the United States during the 2008 recession is reconstructed at county and quarterly levels. The resulting data set is used to estimate the causal impact of such news on unemployment, hiring, and separation rates. Exposure to pessimistic news is found to suppress hiring and total employment during the early stages of the recession by up to 40% compared to prerecession levels; such news can account for some 7% of the total reduction in employment between 2007 and 2010. Content analysis of the articles in question rules out the possibility that this relationship is driven by reverse causation, that is, newspapers merely reporting poor economic performance. Further analysis of Google search data suggests that the effect is mediated by changes in public attitude caused by exposure to negative news. These findings imply that labor market outcomes can differ due to arbitrary differences in the dispersal of economic information. Bearings on economic theory, including the notions of “sunspots” and “animal spirits,” are discussed.

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“…If a news report is placed first in that newsletter, we consider it to be primary news; if it appears later in the newsletter (or if the news does not appear at all), we consider it to be of secondary importance. Berger et al (2006) constructed an intensity index to capture the quality and quantity of press coverage on ECB policy; however, in the light of our limited number of sources, this is not possible here.…”

Section: Importance Of Newsmentioning

confidence: 99%

EMU-Related News and Financial Markets in the Czech Republic, Hungary, and Poland

Buettner

Hayo

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in MAGKS GöttingenThanks to participants of the MAGKS research seminar in Rauischholzhausen, the SMYE in Lille, the ESCE in Paris, and a research seminar at the University of Marburg for helpful comments. All remaining shortcomings are ours. EMU-related News and Financial AbstractWe analyse the impact of news on five financial markets in the Czech Republic, Hungary and Poland using a newly constructed data set in a GARCH framework. Macroeconomic shocks (on GDP, inflation rate, current account and trade balance) are constructed as deviations from expected values. EMU-related political and fiscal news is captured as news dummies.Macroeconomic shocks significantly affect short-term interest rates and, to a lesser extent, other financial variables. Political and fiscal news has an impact on long-term bond yields and exchange rates. News displayed prominently in our media sources has a greater impact on financial markets than other news and, in addition, the sources of news themselves matter. We also discover asymmetric effects of news within markets. Finally, using a pooled GARCH model we find that macroeconomic shocks have the strongest impact on financial markets in Hungary, while political news has the largest influence in both Hungary and Poland. JEL: G12, G15, F30.

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Monetary Policy in the Media

Cited by 84 publications

References 27 publications

Shocking language: Understanding the macroeconomic effects of central bank communication

Shocking language: Understanding the macroeconomic effects of central bank communication

The Contractionary Effect of Bad Economic News

EMU-Related News and Financial Markets in the Czech Republic, Hungary, and Poland

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