The paper assesses the communication strategies of the Federal Reserve, the Bank of England and the European Central Bank and their effectiveness. We find that the effectiveness of communication is not independent from the decisionmaking process in the committee. The paper shows that the Federal...

This paper assesses the change in Federal Reserve policy introduced in 1999, with the publication of statements about the outlook for monetary policy (and later about the balance of risks) immediately after each FOMC meeting. We find that markets anticipated monetary policy decisions equally...

I show that the well-documented pre-FOMC drift and high returns on FOMC day are realized only on the small subset of FOMC days preceded by key macro data releases. On the other two-thirds of all FOMC days, there is neither drift nor any announcement premium. Predictors of pre-FOMC drift (VIX and...

•Bitcoin valuation is largely a function of both the real yield and expected inflation.•Fed assets in relation to real gdp drive the real yield.•Money supply in excess of real gdp drives inflation.•Bitcoin, like gold, faces twin headwinds if the fed sticks with announced policy and...

As economies recover from the pandemic, major central banks are beginning “lift-off.” This paper looks at issues beyond lift-off to full normalization or “cruising altitude.” Two novel models are used: 1) a yield curve model where the riskless rate is computed directly from bond yields...

This paper develops a model based on a target-zone approach in which the dynamics of government bond yields follow a quasi-bounded process, such that the zero lower bound (ZLB) can be breached if the probability leakage condition of the dynamics is met. A one-sided U-shaped bond yield...

We quantify the informational content of statements issued by the interest-rate setting committee of the Central Bank of Brazil (COPOM), building on the methodology developed by Lucca and Trebbi (2011). Using Google search queries, we measure the extent to which each COPOM statement is perceived...

This paper discusses the reasons for Brazil.s high policy real interest rates by considering two opposing views, the orthodox and heterodox approaches. While orthodox authors defend the position that bad domestic policies are the cause of the high interest rate, heterodox economists claim that...

Policy makers have argued that markets are not pricing climate risk appropriately yet, which may lead to a misallocation of resources and financial instability. Climate riskadjusted refinancing operations (CAROs) conducted by the central bank are one possible instrument to address this issue....

This paper examines the importance of central bank communication in ensuring the effectiveness of monetary policy and in underpinning the credibility, accountability and legitimacy of independent central banks. It documents how communication has become a monetary policy tool in itself; one...