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Original title:
Media Treatment of Monetary Policy Surprises and Their Impact on Firms’ and Consumers’ Expectations
Authors: Pinter, J. ; Kočenda, Evžen
Document type: Research reports
Year: 2021
Language: eng
Series: IES Working Papers, volume: 30/2021
Abstract: We empirically investigate whether monetary policy announcements affect firms’ and consumers’ expectations by taking into account media treatments of monetary policy announcements. To identify exogenous changes in monetary policy stances, we use the standard financial monetary policy surprise measures in the euro area. We then analyze how a general newspaper and a financial newspaper (Le Monde and The Financial Times) report on announcements. We find that 87 % of monetary policy surprises are either not associated with the general newspaper reporting a change in the monetary policy stance to their readers or have a sign that is inconsistent with the media report of the announcement. When we use the raw monetary policy surprises variable as an independent variable in the link between monetary policy announcements and firms’/consumers’ expectations, we mostly do not find, in line with several previous studies, any statistically significant association. When we take only monetary policy surprises that are consistent with the general newspaper report, in almost all cases we find that monetary policy surprises on the immediate monetary policy stance do affect expectations. Surprises related to future policy inclination and information shocks usually do not appear to matter. The results appear to be in line with rational inattention theories and highlight the need for caution in the use of monetary policy surprise measures for macroeconomic investigations.
Keywords: consumer expectations; European Central Bank; firm expectations; information effect; monetary policy surprises
Institution: Institute of Information Theory and Automation AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: http://library.utia.cas.cz/separaty/2022/E/kocenda-0556327.pdf
Original record: http://hdl.handle.net/11104/0330840
Permalink: http://www.nusl.cz/ntk/nusl-508564
The record appears in these collections:
Research > Institutes ASCR > Institute of Information Theory and Automation
Reports > Research reports
Authors: Pinter, J. ; Kočenda, Evžen
Document type: Research reports
Year: 2021
Language: eng
Series: IES Working Papers, volume: 30/2021
Abstract: We empirically investigate whether monetary policy announcements affect firms’ and consumers’ expectations by taking into account media treatments of monetary policy announcements. To identify exogenous changes in monetary policy stances, we use the standard financial monetary policy surprise measures in the euro area. We then analyze how a general newspaper and a financial newspaper (Le Monde and The Financial Times) report on announcements. We find that 87 % of monetary policy surprises are either not associated with the general newspaper reporting a change in the monetary policy stance to their readers or have a sign that is inconsistent with the media report of the announcement. When we use the raw monetary policy surprises variable as an independent variable in the link between monetary policy announcements and firms’/consumers’ expectations, we mostly do not find, in line with several previous studies, any statistically significant association. When we take only monetary policy surprises that are consistent with the general newspaper report, in almost all cases we find that monetary policy surprises on the immediate monetary policy stance do affect expectations. Surprises related to future policy inclination and information shocks usually do not appear to matter. The results appear to be in line with rational inattention theories and highlight the need for caution in the use of monetary policy surprise measures for macroeconomic investigations.
Keywords: consumer expectations; European Central Bank; firm expectations; information effect; monetary policy surprises
Institution: Institute of Information Theory and Automation AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: http://library.utia.cas.cz/separaty/2022/E/kocenda-0556327.pdf
Original record: http://hdl.handle.net/11104/0330840
Permalink: http://www.nusl.cz/ntk/nusl-508564
The record appears in these collections:
Research > Institutes ASCR > Institute of Information Theory and Automation
Reports > Research reports
Record created 2022-09-28, last modified 2023-12-06