Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/286358 
Year of Publication: 
2023
Series/Report no.: 
IES Working Paper No. 29/2023
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
We examine whether artificial intelligence (AI) can decipher European Central Bank's communication. Employing 1769 inter-meeting verbal communication events of the European Central Bank's Governing Council members, we construct an AI-based indicator evaluating whether communication is leaning towards easing, tightening or maintaining the monetary policy stance. We find that our AI-based indicator replicates well similar indicators based on human expert judgment but at much higher speed and at much lower costs. Using our AI-based indicator and a number of robustness checks, our regression results show that ECB communication matters for the future monetary policy even after controlling for financial market expectations and lagged monetary policy decisions.
Subjects: 
Artificial intelligence
central bank communication
monetary policy
JEL: 
E52
E58
Document Type: 
Working Paper

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