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 (SSRN Scholarly Paper 3355356).
DOI: https://doi.org/10.2139/ssrn.3355356
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
DOI: https://doi.org/10.1515/roe-2014-0104
View in Google Scholar
Baranowski, P., Doryń, W., Łyziak, T., & Stanisławska, E. (2021). Words and deeds in managing expectations: Empirical evidence from an inflation targeting economy. Economic Modelling, 95, 49–67. https://doi.org/10.1016/j.econmod.2020.12.003
DOI: 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
DOI: https://doi.org/10.1080/00036846.2016.1210782
View in Google Scholar
Binder, Carola. (2020). Coronavirus Fears and Macroeconomic Expectations. The Review of Economics and Statistics, 102, 1-27.
DOI: https://doi.org/10.1162/rest_a_00931
View in Google Scholar
Bholat, D., Hans, S., Santos, P., & Schonhardt-Bailey, C. (2015). Text mining for central banks [Handbooks]. Centre for Central Banking Studies, Bank of England. https://econpapers.repec.org/bookchap/ccbhbooks/33.htm
DOI: https://doi.org/10.2139/ssrn.2624811
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/10.1257/jel.20231683
DOI: https://doi.org/10.3386/w30277
View in Google Scholar
Born, B., Ehrmann, M., & Fratzscher, M. (2011). Central Bank Communication on Financial Stability (SSRN Scholarly Paper 1804821). https://doi.org/10.2139/ssrn.1804821
DOI: https://doi.org/10.2139/ssrn.1804821
View in Google Scholar
Candia, B., Coibion, O., & Gorodnichenko, Y. (2020). Communication and the Beliefs of Economic Agents. NBER Working Papers. https://ideas.repec.org//p/nbr/nberwo/27800.html
DOI: https://doi.org/10.3386/w27800
View in Google Scholar
Cavallo, A., Cruces, G., & Perez-Truglia, R. (2017). Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments. American Economic Journal: Macroeconomics, 9(3), 1–35. https://www.jstor.org/stable/26598361
DOI: https://doi.org/10.1257/mac.20150147
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 What do we know in 2019? NBP Working Papers. 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 (SSRN Scholarly Paper 2993893). https://doi.org/10.2139/ssrn.2993893
DOI: https://doi.org/10.2139/ssrn.3043098
View in Google Scholar
Coibion, O., & Gorodnichenko, Y. (2015). Inflation Expectations in Ukraine: A Long Path to Anchoring? https://escholarship.org/uc/item/9wv3m70v
DOI: https://doi.org/10.26531/vnbu2015.233.006
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_3a2020_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
DOI: https://doi.org/10.1086/718982
View in Google Scholar
Correa, R., Garud, K., Londono, J. M., & Mislang, N. (2020). Sentiment in Central Banks’ Financial Stability Reports (SSRN Scholarly Paper 3091943). https://doi.org/10.2139/ssrn.3091943
DOI: https://doi.org/10.1093/rof/rfaa014
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. https://ideas.repec.org//p/hep/macppr/201401.html
DOI: https://doi.org/10.2139/ssrn.2352856
View in Google Scholar
Ehrmann, M., & Fratzscher, M. (2005). How Should Central Banks Communicate? (SSRN Scholarly Paper 850944). https://doi.org/10.2139/ssrn.850944
DOI: https://doi.org/10.2139/ssrn.850944
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
DOI: https://doi.org/10.1093/poq/nfw006
View in Google Scholar
Gardt, M., Angino, S., Mee, S., & Glöckler, G. (2022). ECB Communication with the wider public. https://www.ecb.europa.eu/pub/economic-bulletin/articles/2022/html/ecb.ebart202108_02~5c1e5a116d.en.html
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
DOI: 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? https://www.bis.org/publ/bisbull51.htm
View in Google Scholar
Ha, J., Kose, M. A., & Ohnsorge, F. L. (2019). Understanding Inflation in Emerging and Developing Economies. Koç University-TUSIAD Economic Research Forum Working Papers. https://ideas.repec.org//p/koc/wpaper/1902.html
DOI: https://doi.org/10.1596/1813-9450-8761
View in Google Scholar
Hansen, S., & McMahon, M. F. (2015). Shocking Language: Understanding the Macroeconomic Effects of Central Bank Communication (SSRN Scholarly Paper 2717790). https://doi.org/10.2139/ssrn.2717790
DOI: https://doi.org/10.2139/ssrn.2717790
View in Google Scholar
Hołda, M. (2019). Newspaper-based economic uncertainty indices for Poland, National Bank of Poland Working Paper No. 310.
View in Google Scholar
Jegadeesh, N., & Wu, D. (Andrew). (2017). Deciphering Fedspeak: The Information Content of FOMC Meetings. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2939937
DOI: https://doi.org/10.2139/ssrn.2939937
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. https://ideas.repec.org//p/eti/dpaper/19038.html
View in Google Scholar
King, G., Schneer, B., & White, A. (2017). How the news media activate public expression and influence national agendas. Science, 358, 776–780.
DOI: https://doi.org/10.1126/science.aao1100
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
DOI: https://doi.org/10.1016/j.jmoneco.2019.08.014
View in Google Scholar
Li, F. (2006). Do Stock Market Investors Understand the Risk Sentiment of Corporate Annual Reports? (SSRN Scholarly Paper 898181). https://doi.org/10.2139/ssrn.898181
DOI: https://doi.org/10.2139/ssrn.898181
View in Google Scholar
Londono, J. M., Claessens, S., & Correa, R. (2022). Financial Stability Governance and Central Bank Communications (SSRN Scholarly Paper 4275117). https://doi.org/10.2139/ssrn.4275117
DOI: https://doi.org/10.2139/ssrn.4275117
View in Google Scholar
Loughran, T., & McDonald, B. (2010). When is a Liability not a Liability? Textual Analysis, Dictionaries, and 10-Ks (SSRN Scholarly Paper 1331573). https://papers.ssrn.com/abstract=1331573
DOI: https://doi.org/10.1111/j.1540-6261.2010.01625.x
View in Google Scholar
Moessner, R., & Takáts, E. (2020). How well-anchored are long-term inflation expectations? BIS Working Papers. https://ideas.repec.org//p/bis/biswps/869.html
View in Google Scholar
Montes, G. C., Oliveira, L. V., Curi, A., & Nicolay, R. T. F. (2016). Effects of transparency, monetary policy signalling and clarity of central bank communication on disagreement about inflation expectations. Applied Economics, 48(7), 590–607. https://doi.org/10.1080/00036846.2015.1083091
DOI: https://doi.org/10.1080/00036846.2015.1083091
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
DOI: 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
Smets, F. (2014). Financial Stability and Monetary Policy: How Closely Interlinked? International Journal of Central Banking, 10(2), 263–300. https://ideas.repec.org//a/ijc/ijcjou/y2014q2a11.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
DOI: 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
DOI: 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 (SSRN Scholarly Paper 923911). https://doi.org/10.2139/ssrn.923911
DOI: 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.federalreserve.gov/econres/notes/feds-notes/central-banks-financial-stability-communications-during-the-covid-19-pandemic-20200918.html
DOI: https://doi.org/10.17016/2380-7172.2741
View in Google Scholar
Vorisek,D., Panizza,U., Kose, M. A., Matsuoka, H. & Ha, J. (2022). Anchoring inflation expectations in emerging and developing economies. https://cepr.org/voxeu/columns/anchoring-inflation-expectations-emerging-and-developing-economies
View in Google Scholar
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Lada Voloshchenko-Holda, Paweł Niedziółka
This work is licensed under a Creative Commons Attribution 4.0 International License.
