Central bank communication in unconventional times: Some evidence from a textual analysis of the National Bank of Poland communication during the COVID-crisis
DOI:
https://doi.org/10.18559/ebr.2024.1.1039Keywords:
Central bank communication, textual analysis, financial stability, price stability, monetary policy, attention to inflationAbstract
The article analyses the communication of the National Bank of Poland (NBP) one year after the announcement of the crisis response package adopted after the outbreak of the COVID pandemic. It presents the perspective of a central bank that first entered unconventional monetary ground during the COVID-crisis. The analysis aims to answer the question of what message about monetary policy objectives may have been conveyed in communication with regard to possible interpretations of the response actions by economic agents. Misinterpretations of policy actions at the time, fuelled by the increased attention to inflation, could later contribute to higher inflation persistence. The article presents findings based on the innovative use of MAXQDA Pro 2022 solutions for textual analysis of central bank’s communication. It points to three inconsistencies in the NBP’s communication that could potentially lead to misinterpretation of the NBP’s policy actions in response to the crisis and thus affect the formation of expectations.
Downloads
References
Andre, P., Pizzinelli, C., Roth, C., & Wohlfart, J. (2019). Subjective models of the macroeconomy: Evidence from experts and representative samples. The Review of Economic Studies, 89(6), 2958–2991.
View in Google Scholar
Apel, M., & Blix, G. M. (2014). How informative are central bank minutes? Review of Economics, 65(1), 53–76. https://econpapers.repec.org/article/lusreveco/v_3a65_3ay_3a2014_3ai_3a1_3ap_3a53-76.htm
View in Google Scholar
Baranowski, P., Doryń, W., Łyziak, T., & Stanisławska, E. (2021). Words and deeds in managing expectations: Empirical evidence from an inflation targe- ting economy. Economic Modelling, 95, 49–67. https://doi.org/10.1016/j.econmod.2020.12.003
View in Google Scholar
Bennani, H., & Neuenkirch, M. (2017). The (home) bias of European central bankers: New evidence based on speeches. Applied Economics, 49(11), 1114–1131. https://doi.org/10.1080/00036846.2016.1210782
View in Google Scholar
Bholat, D., Hans, S., Santos, P., & Schonhardt-Bailey, C. (2015). Text mining for central banks. Centre for Central Banking Studies, Bank of England. https://econpapers.repec.org/bookchap/ccbhbooks/33.htm
View in Google Scholar
Binder, C. (2020). Coronavirus fears and macroeconomic expectations. The Review of Economics and Statistics, 102, 1–27.
View in Google Scholar
Blinder, A. S., Ehrmann, M., de Haan, J., & Jansen, D. J. (2022). Central Bank Communication with the general public: Promise or false hope? Journal of Economic Literature. https://doi.org/10.3386/w30277
View in Google Scholar
Born, B., Ehrmann, M., & Fratzscher, M. (2011). Central Bank Communication on financial stability. ECB Working Paper, 1332. https://doi.org/10.2139/ssrn.1804821
View in Google Scholar
Buelens, C. (2023). Googling “inflation”: What does Internet Search behaviour reveal about household (in)attention to inflation and monetary policy? European Economy – Discussion Papers, 183. https://ideas.repec.org//p/euf/dispap/183.html
View in Google Scholar
Candia, B., Coibion, O., & Gorodnichenko, Y. (2020). Communication and the beliefs of economic agents. NBER Working Papers, 27800. https://ideas.repec.org//p/nbr/nberwo/27800.html
View in Google Scholar
Cavallo, A., Cruces, G., & Perez-Truglia, R. (2017). Inflation expectations, lear- ning, and supermarket prices: Evidence from survey experiments. American Economic Journal: Macroeconomics, 9(3), 1–35. https://www.jstor.org/stable/26598361
View in Google Scholar
Chmielewski, T., Kocięcki, A., Łyziak, T., Przystupa, J., Stanisławska, E., Walerych, M., & Wróbel, E. (2020). Monetary policy transmission mechanism in Poland w in 2019? NBP Working Papers, 329. https://ideas.repec.org//p/nbp/nbpmis/329.html
View in Google Scholar
Coenen, G., Ehrmann, M., Gaballo, G., Hoffmann, P., Nakov, A., Nardelli, S., Persson, E., & Strasser, G. (2017). Communication of monetary policy in unconventional times. ECB Working Paper, 2080. https://doi.org/10.2139/ssrn.2993893
View in Google Scholar
Coibion, O., & Gorodnichenko, Y. (2015). Inflation expectations in Ukraine: A long path to anchoring https://escholarship.org/uc/item/9wv3m70v
View in Google Scholar
Coibion, O., Gorodnichenko, Y., Kumar, S., & Pedemonte, M. (2020). Inflation expectations as a policy tool? Journal of International Economics, 124(C). https://econpapers.repec.org/article/eeeinecon/v_3a124_3ay_3a-2020_3ai_3ac_3as0022199620300167.htm
View in Google Scholar
Coibion, O., Gorodnichenko, Y., & Weber, M. (2022a). Does policy communication during COVID work? International Journal of Central Banking, 18(1), 3–39. https://ideas.repec.org//a/ijc/ijcjou/y2022q1a1.html
View in Google Scholar
Coibion, O., Gorodnichenko, Y., & Weber, M. (2022b). Monetary policy communications and their effects on household inflation expectations. Journal of Political Economy, 130(6), 1537–1584. https://doi.org/10.1086/718982
View in Google Scholar
Correa, R., Garud, K., Londono, J. M., & Mislang, N. (2020, March 30). Sentiment in central banks’ financial stability reports. https://doi.org/10.2139/ssrn.3091943
View in Google Scholar
Dräger, L., Lamla, M. J., & Pfajfar, D. (2014). Are consumer expectations theory-consistent? The role of macroeconomic determinants and Central Bank Communication. Macroeconomics and Finance Series, 201401. https://ideas.repec.org//p/hep/macppr/201401.html
View in Google Scholar
Flaxman, S., Goel, S., & Rao, J. M. (2016). Filter bubbles, echo chambers, and online news consumption. Public Opinion Quarterly, 80(S1), 298–320. https://doi.org/10.1093/poq/nfw006
View in Google Scholar
Gentzkow, M., Kelly, B., & Taddy, M. (2019). Text as data. Journal of Economic Literature, 57(3), 535–574. https://doi.org/10.1257/jel.20181020
View in Google Scholar
Goel, T., & Tsatsaronis, K. (2022). Anchoring of inflation expectations: has past progress paid off? BIS Bulletin, 51. https://www.bis.org/publ/bisbull51.htm
View in Google Scholar
GUS. (2023, October 6). Price indices of consumer goods and services. https://stat.gov.pl/en/topics/prices-trade/price-indices/price-indices-of-consumer-goods-and-services/
View in Google Scholar
Hansen, S., & McMahon, M. F. (2016). Shocking language: Understanding the macroeconomic effects of central bank communication. Journal of International Economics, 99(S1), S114–S133. https://econpapers.repec.org/article/eeeinecon/v_3a99_3ay_3a2016_3ai_3as1_3ap_3as114-s133.htm
View in Google Scholar
Hołda, M. (2019). Newspaper-based economic uncertainty indices for Poland. National Bank of Poland Working Paper, 310.
View in Google Scholar
Jegadeesh, N., & Wu, D. (2015). Deciphering fedspeak: The information content of FOMC meetings. 2016 AFA Anual Meeting Working Paper. https://www.aeaweb.org/conference/2016/retrieve.php?pdfid=1136
View in Google Scholar
Keida, M., & Takeda, Y. (2019). The art of Central Bank Communication: A topic analysis on words used by the Bank of Japan’s governors. Discussion Papers, 19038. https://ideas.repec.org//p/eti/dpaper/19038.html
View in Google Scholar
Lamla, M. J., & Vinogradov, D. V. (2019). Central bank announcements: Big news for little people? Journal of Monetary Economics, 108, 21–38. https://doi.org/10.1016/j.jmoneco.2019.08.014
View in Google Scholar
Li, F. (2006, April 21). Do stock market investors understand the risk sentiment of corporate annual reports?https://doi.org/10.2139/ssrn.898181
View in Google Scholar
Londono, J. M., Claessens, S., & Correa, R. (2022, September 29). Financial stability governance and Central Bank Communications. International Journal of Central Banking. https://doi.org/10.2139/ssrn.4275117
View in Google Scholar
Loughran, T., & McDonald, B. (2010, March 4). When is a liability not a liability? Textual analysis, dictionaries, and 10-Ks. Journal of Finance. https://papers.ssrn.com/abstract=1331573
View in Google Scholar
Marcellino, M., & Stevanovic, D. (2022). The demand and supply of information about inflation. CIRANO Working Papers, 2022s-27. https://ideas.repec.org//p/cir/cirwor/2022s-27.html
View in Google Scholar
Matysek-Jędrych, A. (2018). On a growing central banks accountability for financial stability—macroprudential perspective. Economics and Business Review, 4(4), 30–45. https://doi.org/10.18559/ebr.2018.4.2
View in Google Scholar
NBP. (2020a). Raport o stabilności systemu finansowego. Wydanie specjalne: Skutki pandemii COVID-19. https://nbp.pl/wp-content/uploads/2022/09/rsf062020.pdf
View in Google Scholar
NBP. (2020b, July 2020). Inflation report. https://static.nbp.pl/dokumenty/polityka-pieniezna/raporty-o-inflacji/iraport_july2020.pdf
View in Google Scholar
NBP. (2023, January 14). Core inflation times series starting from 2001 on a monthly, quarterly and yearly basis. https://nbp.pl/en/statistic-and-financial-reporting/core-inflation/
View in Google Scholar
Nimark, K. P., & Pitschner, S. (2019). News media and delegated information choice. Journal of Economic Theory, 181, 160–196. https://doi.org/10.1016/j.jet.2019.02.001
View in Google Scholar
Pęzik, P. (2012). Wyszukiwarka PELCRA dla danych NKJP. Narodowy Korpus Języka Polskiego. Wydawnictwo Naukowe PWN. http://dspace.uni.lodz.pl:8080/xmlui/handle/11089/1326
View in Google Scholar
Rybinski, K. (2019). A machine learning framework for automated analysis of central bank communication and media discourse. The case of Narodowy Bank Polski. Bank i Kredyt, 50(1), 1–20. https://ideas.repec.org//a/nbp/nbpbik/v50y2019i1p1-20.html
View in Google Scholar
Szyszko, M., & Rutkowska, A. (2022). Do words transform into actions? The consistency of central banks? communications and decisions. Equilibrium. Quarterly Journal of Economics and Economic Policy, 17(1), 31–49. https://doi.org/10.24136/eq.2022.002
View in Google Scholar
Ter Ellen, S., Larsen, V. H., & Thorsrud, L. A. (2022). Narrative monetary policy surprises and the media. Journal of Money, Credit and Banking, 54(5), 1525–1549. https://doi.org/10.1111/jmcb.12868
View in Google Scholar
Tetlock, P. C., Saar-Tsechansky, M., & Macskassy, S. (2007). More than words: Quantifying language to measure firms’ fundamentals. 9th Annual Texas Finance Festival. https://doi.org/10.2139/ssrn.923911
View in Google Scholar
Yang, J., Correa, R., & Londono, J. M. (2020). Central banks’ financial stability communications during the COVID-19 pandemic. https://www.federal-notes/central-banks-financial-stability-communications-during-the-covid-19-pandemic-20200918.html
View in Google Scholar
Downloads
Published
Versions
- 2024-10-10 (2)
- 2024-03-29 (1)
Issue
Section
License
Copyright (c) 2024 Lada Voloshchenko-Holda, Paweł Niedziółka
This work is licensed under a Creative Commons Attribution 4.0 International License.
