Bulletin n. 2/2011
October 2011
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • David-Jan Jansen
    Does The Clarity Of Central Bank Communication Affect Volatility In Financial Markets? Evidence From Humphrey-Hawkins Testimonies
    in Contemporary Economic Policy , Volume 29, Issue 4 ,  2011 ,  494-509
    By applying readability statistics to the Humphrey-Hawkins testimonies given by the Federal Reserve Chairman, it is tested whether the clarity of central bank communication affects volatility in financial markets. There are three results. First, when clarity matters, it has a diminishing effect on volatility. Second, clarity of communication matters mostly for volatility of medium-term interest rates. Third, the effects of clarity vary over time. Clarity mattered especially, but not exclusively during Alan Greenspan's Chairmanship. Overall, the analysis illustrates the importance of transparent communication on monetary policy
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