Crafting Consensus: Why Central Bankers Change Their Speech and How Speech Changes the Economy (Hardcover) (ISBN-13: 9780190499488)

In a world dependent on the constant sharing of information, central bankers increasingly communicate their policies to the mass public. Central bank communications are drafted in monetary policy committee meetings composed of policymakers with differing interests. Despite their differences, committee members must come together, write, and agree to an official policy statement. Once released to the public, central bank communications then affect citizens' actions and ultimately, the economy. But how exactly does this work?

In Crafting Consensus, Nicole Baerg explains how the transparency of central bank communication depends on the configuration of committee members' preferences. Baerg argues that monetary policy committees composed of members with differing preferences over inflation are better suited to communicating precise information with the public. These diverse committees produce central bank statements of higher quality and less uncertainty than those from more homogeneous committees. Additionally, she argues that higher quality statements more effectively shape individuals' inflation expectations and move the economy in ways that policymakers intend. Baerg demonstrates that central bankers are not impartial technocrats and that their preferences and the institutional rules where they work matter for understanding the politics of monetary policy and variations in economic performance over time.

Conducting empirical analysis from historical archival data, textual analysis, machine-learning, survey experiments, and cross-sectional time-series data, Crafting Consensus offers a new theory of committee decision making and a battery of empirical tests to provide a rich understanding of modern-day central banking.

Author: Nicole Baerg
ISBN-10: 0190499486
ISBN-13: 9780190499488
Publisher: Oxford University Press, USA
Language: English
Published: 10/12/2020
Pages: 224
Format: Hardcover
Weight: 0.85lbs
Size: 8.30h x 5.40w x 0.90d

Review Citation(s):
Choice 08/01/2021