The program of research is intended to develop a network of academics from around the world and to further our understanding of central bank communication. Although the topic of the communications strategy of a central bank is attracting considerable interest in the profession it remains a nascent field that has yet to coalesce in a meaningful fashion. Central banks, and governments more generally, influence markets not only through their actions but by their words. The credit crisis that began in 2007 is the latest event that underscores the importance of communication in determining the effectiveness of monetary policy. An appraisal of the relevant issues goes beyond recognition of the role of communication. A more general understanding of how central banks conduct monetary policy is also required. This process includes, but is not limited to, historical, political economy, and psychological elements that, when meshed together, generate an evolutionary view of central banking. Partly for this reason, in 2007, Ben Bernanke called upon the profession to develop better models of how inflation expectations are anchored and, in particular, how central banks can better communicate their monetary policy strategy. An open question is how effective existing central bank communication strategies have been so far. Another unexplored area is whether central bankers are susceptible to creating “spin” or biasing their statements to influence expectations, and whether financial market experts, or other consumers of central bank information, are attentive readers interested only in the pure information content of central bank pronouncements. Finally, such views must also confront notions of financial market efficiency that dominate the field of finance.
A more autonomous central bank should also be accountable, and more transparent. While the appeal of greater transparency is seemingly evident how transparent, and for what purposes transparency was to be used, has never been clearly spelled out. Does this imply constraints, implicit in the main, on how transparent they actually are, or should be? Communicating subtle differences about the horizon over which current policies might have a measurable impact is yet another communications challenge and is potentially made more difficult still when possible future interest rate paths are also published. Many central banks have also turned their attention to trying their hand at maintaining financial system stability. More research into the nexus between financial system stability, the conduct of monetary policy, and how these are effectively communicated and delivered is required since there is no consensus even on a definition of financial stability.
There is a need to create a harmonized international dataset on speeches (and other forms of central bank communication and the message they are meant to convey to the public). Unfortunately, existing series differ with respect to data sources, sample periods, and in the interpretation of successful and unsuccessful forms of communication. However, the availability of high-frequency data represents a clear opportunity to better understand the effects of monetary policy.
Additionally, a host of related issues that also require research also come to mind. It may be the case that the audience of a speech matters as much as the theme of the speech. The exact timing of the speech may have a decisive influence on expectations. The extant evidence suggests that the principal topic of the speech also matters. Finally, it is not yet clear what technique is most suitable to analyze such data.
Please see the above website for future events and under “past events” for papers and programs of other meetings held under the auspices of the central bank communication network.