Does the Clarity of Inflation Reports Affect Volatility in Financial Markets?
IMF Working Papers, September 24, 2014
Source details
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- Does the Clarity of Inflation Reports Affect Volatility in Financial Markets?
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Bibliographic details
- Authors: Aleš Bulíř, Martin Cihak, David-Jan Jansen
- Published: September 24, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498392914.001
Study overview
- Authors: Ales Bulir, Martin Cihak, David-Jan Jansen
- Publication date: September 24, 2014
- Publication type: IMF Working Papers
- Pages: 29
- Volume: 2014
- Issue: 175
- Series: Working Paper No. 2014/175
- DOI: https://doi.org/10.5089/9781498392914.001
- Stock No: WPIEA2014175
- ISBN: 9781498392914
- ISSN: 1018-5941
Research question and scope
- Research question: Whether clarity of central bank inflation reports affects return volatility in financial markets.
- Central banks analyzed: Czech National Bank, European Central Bank, Bank of England, Sveriges Riksbank.
- Readability measure used: Flesch-Kincaid grade level (a standard readability measure).
Key findings
- Evidence of a negative relationship between clarity and market volatility is found mainly for the euro area.
- The negative relationship is observed prior to and during the early stage of the global financial crisis.
- As the crisis unfolded, there is no longer robust evidence of a negative connection between report clarity and market volatility.
- Conclusion: Reducing noise using clear reports is possible but not without challenges, especially in times of crisis.
Subjects and keywords
- Subject: Banking, Communications in revenue administration, Financial crises, Financial institutions, Global financial crisis of 2008-2009, Inflation, Prices, Revenue administration, Stocks
- Keywords: BoE web site, central bank communication, clarity, Communications in revenue administration, estimation result, financial market return, financial market volatility, financial markets, FK grade level, Global, Global financial crisis of 2008-2009, Inflation, inflation report, inflation reports, market reaction, market uncertainty, point estimate, stock index, Stocks, volatile inflation, volatility, WP
Availability and formats
- Formats: PDF and other formats available on IMF eLibrary (not listed here).
- Note: This Working Paper should not be reported as representing the views of the IMF. The views expressed are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress and are published to elicit comments and to further debate.
IMF Working Paper — Does the Clarity of Inflation Reports Affect Volatility in Financial Markets? (Ales Bulir, Martin Cihak, David-Jan Jansen), September 24, 2014.