Bounded Rationality in Central Bank Communication
Fuente:
arXiv
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| Auteurs principaux: | , |
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| Format: | Preprint |
| Publié: |
2024
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| _version_ | 1866912108215533568 |
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| author | Kim, Wonseong Lee, Choong Lyol |
| author_facet | Kim, Wonseong Lee, Choong Lyol |
| contents | This study explores the influence of FOMC sentiment on market expectations, focusing on cognitive differences between experts and non-experts. Using sentiment analysis of FOMC minutes, we integrate these insights into a bounded rationality model to examine the impact on inflation expectations. Results show that experts form more conservative expectations, anticipating FOMC stabilization actions, while non-experts react more directly to inflation concerns. A lead-lag analysis indicates that institutions adjust faster, though the gap with individual investors narrows in the short term. These findings highlight the need for tailored communication strategies to better align public expectations with policy goals. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2411_04286 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Bounded Rationality in Central Bank Communication Kim, Wonseong Lee, Choong Lyol Econometrics Applications This study explores the influence of FOMC sentiment on market expectations, focusing on cognitive differences between experts and non-experts. Using sentiment analysis of FOMC minutes, we integrate these insights into a bounded rationality model to examine the impact on inflation expectations. Results show that experts form more conservative expectations, anticipating FOMC stabilization actions, while non-experts react more directly to inflation concerns. A lead-lag analysis indicates that institutions adjust faster, though the gap with individual investors narrows in the short term. These findings highlight the need for tailored communication strategies to better align public expectations with policy goals. |
| title | Bounded Rationality in Central Bank Communication |
| topic | Econometrics Applications |
| url | https://arxiv.org/abs/2411.04286 |