TY - JOUR
T1 - Does the clarity of central bank communication affect volatility in financial markets? Evidence from Humphrey-Hawkins testimonies
AU - Jansen, David Jan
PY - 2011/10
Y1 - 2011/10
N2 - By applying readability statistics to the Humphrey-Hawkins testimonies given by the Federal Reserve Chairman, it is tested whether the clarity of central bank communication affects volatility in financial markets. There are three results. First, when clarity matters, it has a diminishing effect on volatility. Second, clarity of communication matters mostly for volatility of medium-term interest rates. Third, the effects of clarity vary over time. Clarity mattered especially, but not exclusively during Alan Greenspan's Chairmanship. Overall, the analysis illustrates the importance of transparent communication on monetary policy.
AB - By applying readability statistics to the Humphrey-Hawkins testimonies given by the Federal Reserve Chairman, it is tested whether the clarity of central bank communication affects volatility in financial markets. There are three results. First, when clarity matters, it has a diminishing effect on volatility. Second, clarity of communication matters mostly for volatility of medium-term interest rates. Third, the effects of clarity vary over time. Clarity mattered especially, but not exclusively during Alan Greenspan's Chairmanship. Overall, the analysis illustrates the importance of transparent communication on monetary policy.
UR - http://www.scopus.com/inward/record.url?scp=80053061769&partnerID=8YFLogxK
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U2 - 10.1111/j.1465-7287.2010.00238.x
DO - 10.1111/j.1465-7287.2010.00238.x
M3 - Article
AN - SCOPUS:80053061769
SN - 1074-3529
VL - 29
SP - 494
EP - 509
JO - Contemporary Economic Policy
JF - Contemporary Economic Policy
IS - 4
ER -