Central Bank Optimism as a Policy Tool: Evidence from the Bank of England

Tola Adesina

Research output: Working paper

Abstract

We evaluate the tone of optimism in the Bank of England’s Monetary Policy Committee (MPC) communication using computerised textual analysis and then explore the impacts of optimism shocks on key macroeconomic variables. We show that innovations in optimism impact key macroeconomic variables in the same way that a contractionary monetary policy would. We find that increasing optimism shocks in MPC communication leads to rising inflation, falling output, declining stock market returns and a rise in the Pound value. We further find evidence that optimism shocks reduce credit availability, the money supply, retail sales as well as earnings. Finally, government bond yields also tend to rise in response to optimism shocks.
Original languageEnglish
Place of PublicationLondon
PublisherBirkbeck, University of London
VolumeBWPEF
Publication statusPublished - Nov 2017

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Policy tools
Optimism
Bank of England
Central bank
Macroeconomic variables
Communication
Monetary policy committees
Retail
Stock market returns
Government bonds
Textual analysis
Credit availability
Inflation
Innovation
Money supply
Monetary policy
Bond yields

Cite this

Adesina, T. (2017). Central Bank Optimism as a Policy Tool: Evidence from the Bank of England. (1708 ed.) London: Birkbeck, University of London.

Central Bank Optimism as a Policy Tool: Evidence from the Bank of England. / Adesina, Tola.

1708. ed. London : Birkbeck, University of London, 2017.

Research output: Working paper

Adesina, T 2017 'Central Bank Optimism as a Policy Tool: Evidence from the Bank of England' 1708 edn, Birkbeck, University of London, London.
Adesina T. Central Bank Optimism as a Policy Tool: Evidence from the Bank of England. 1708 ed. London: Birkbeck, University of London. 2017 Nov.
Adesina, Tola. / Central Bank Optimism as a Policy Tool: Evidence from the Bank of England. 1708. ed. London : Birkbeck, University of London, 2017.
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