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Communication, Central Bank Credibility and Monetary Policy: NBU Held Three Open Research Seminars

05 June 2019

Press Release


On 21 and 22 May 2019, on the eve of the Annual Research Conference Central Bank Communications: From Mystery to Transparency, the National Bank of Ukraine held three open research seminars presented by economists from the International Monetary Fund and the central banks of France and Finland.


At the first seminar, Dr Klodiana Istrefi, economist at the Monetary Policy Research Division at the Banque de France, presented the research paper Perceived FOMC: The Making of Hawks, Doves and Swingers co-authored with Michael D. Bordo, professor of Rutgers University.


The researchers analyzed biographies of 130 members of the Federal Open Market Committee who served during 1960–2015. The authors classified all committee members as hawks, doves, and swingers, according to their monetary policy preferences. Hawks give higher priority to fighting inflation, whereas doves prioritize fostering growth in output and employment. Swingers switch between the two.


The researchers found that monetary policy preferences of the committee members depended heavily on their education and life experience. If a committee member was born in a period of high inflation and studied at a university belonging to the freshwater school (e.g., the University of Chicago), he or she is more inclined to be a hawk. At the same time, if a committee member was born in a period of high unemployment and studied at a university belonging to the saltwater school (e.g., Harvard University), he or she would rather be a dove. Swingers lean towards the majority opinion in the committee regardless of their background.


Video from the open research seminar by Klodiana Istrefi


At the second seminar, the Senior Economist at the International Monetary Fund Mr Etibar Jafarov presented his research paper on how credibility of central banks in Latin America determines their response to strong external shocks.


The researcher analyzed communications by Latin American central banks that implemented the inflation-targeting monetary policy regime. Special attention was given to Brazil, Chile, Colombia, Mexico, and Peru, the countries which faced negative terms-of-trade shocks that caused inflation and depreciation in 2014–2015. At the same time, central banks reacted differently to the crisis: some of them raised interest rates, while others did not.


The paper also revealed that economic agents in countries with low central bank credibility were more pessimistic during a crisis, therefore pushing regulators to raise interest rates to curb inflation. On the other hand, in countries with higher central bank credibility, economic agents expected inflation at the level of the regulator’s target, which even enabled central banks to lower interest rates. The author stressed that a higher level of central bank credibility allowed regulators to respond more flexibly to macroeconomic shocks.


Video from the open research seminar by Etibar Jafarov


At the third seminar, Head of Communications at the Bank of Finland Dr Elisa Newby presented the research paper Mastering Central Banks’ Communication Challenges via Twitter co-authored with Iikka Korhonen, Head of Research at the Bank of Finland.


The researchers used a database of all tweets by European central banks and financial supervisors (including Ukraine, Switzerland, and other non-EU countries) starting from the very point in time they joined Twitter. The authors found that central banks used different communication strategies on Twitter. For instance, some only refer to news on their official websites, while others can informally communicate with the public. At the same time, the researchers emphasize that the general trend is the growing number of central bank tweets related to financial stability issues.


Video from the open research seminar by Elisa Newby and Iikka Korhonen


The NBU launched the open research seminars in July 2015. These seminars provide representatives of academic and expert communities, international financial institutions, the NBU, and other central banks with the opportunity to share their research findings and discuss them with their peers.


The NBU is going to continue organizing research seminars and invites speakers to present their findings on issues related to the NBU’s activities and the operation of the financial system. Email your proposals (along with a desired seminar date, presentation materials, an executive summary, and/or draft contributions) to the Research Division of the NBU Monetary Policy and Economic Analysis Department (email: research@bank.gov.ua).


Materials from open research seminars are available by the link.




Last modification   05.06.2019