What Drives Clarity of Central Bank Communication About Inflation?
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This paper examines whether the clarity of central bank communication about inflation varies with the economic environment. Using readability statistics and content analysis, we study the clarity of communication on the inflation outlook by seven central banks across three continents during the recent decade. We uncover significant and persistent differences in clarity over time and across countries. However, identifying determinants of clarity that are robustly relevant across our sample of central banks proves elusive. Overall, our findings suggest that a single model for clarity of central bank communication is not appropriate. Rather, when studying clarity of communication, country-specific and institution-specific factors are highly relevant.
KeywordsMonetary policy Communication Inflation Clarity Transparency
JEL ClassificationE52 E58
We thank Michael Ehrmann, Jakob de Haan, Helge Berger, Caroline Silverman, Nico Valckx, Zdeněk Tůma, Tomáš Holub, and participants in the 16th Annual International Conference at the University of Crete and in seminars at the International Monetary Fund, the Czech National Bank, and De Nederlandsche Bank for useful suggestions and discussions. The paper also greatly benefited from comments by two anonymous referees. Jansen thanks the IMF Institute for hospitality during his stay as visiting scholar. Research assistance by Kazim Kazimov and Caroline Silverman is gratefully acknowledged. Views expressed in the paper do not necessarily coincide with those of the IMF, the World Bank, the Eurosystem, de Nederlandsche Bank, or the Czech National Bank.
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