Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/224527
Authors: 
Wischnewsky, Arina
Jansen, David-Jan
Neuenkirch, Matthias
Year of Publication: 
2020
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2020: Gender Economics
Abstract: 
This paper retraces how financial stability considerations interacted with U.S. monetary policy before and during the Great Recession. Using text-mining techniques, we construct indicators for financial stability sentiment expressed during testimonies of four Federal Reserve Chairs at Congressional hearings. Including these text-based measures adds explanatory power to Taylor-rule models. In particular, negative financial stability sentiment coincided with a more accommodative monetary policy stance than implied by standard Taylorrule factors, even in the decades before the Great Recession. These findings are consistent with a preference for monetary policy reacting to financial instability rather than acting pre-emptively to a perceived build-up of risks.
Subjects: 
monetary policy
financial stability
Taylor rule
text mining
JEL: 
E52
E58
N12
Document Type: 
Conference Paper

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