Central bank announcements: big news for little people?

Lamla, M. J. and Vinogradov, D. V. (2019) Central bank announcements: big news for little people? Journal of Monetary Economics, 108, pp. 21-38. (doi: 10.1016/j.jmoneco.2019.08.014)

Abstract

Little is known on how and whether central bank announcements affect consumers’ beliefs about policy-relevant economic figures. This paper focuses on consumers’ perceptions and expectations of inflation and interest rates and confidence therein. Based on a sound identification (running surveys shortly before and after communication events), and relying on above 15 000 observations, spanning over 12 FOMC press conferences between December 2015 and June 2018, we document the impact of the central bank communication on the general public. While announcement events have no measurable direct effect on average beliefs, they make people more likely to receive news about the central bank’s policy. In general, informed consumers tend to have lower perceptions and expectations, higher confidence and, at least for perceived inflation, smaller errors.

• Item Type: Articles
• Additional Information: Both authors acknowledge financial support by British Academy / Leverhulme grant SG163018; data collection was partly financed through the University of Essex research awards. Vinogradov acknowledges support from the Russian Foundation for Basic Research grant RFBR 18-010-01166.
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Vinogradov, Professor Dmitri
• Authors: Lamla, M. J., and Vinogradov, D. V.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Journal of Monetary Economics
• Publisher: Elsevier
• ISSN: 0304-3932
• ISSN (Online): 1873-1295
• Published Online: 22 August 2019
• Copyright Holders: Copyright © 2019 Elsevier B.V.
• First Published: First published in Journal of Monetary Economics 108: 21-38
• Publisher Policy: Reproduced in accordance with the publisher copyright policy