Job Market Paper
The Policy Duet: Coordination in U.S. Monetary-Fiscal Communication (draft coming soon)
Abstract: This paper studies the macroeconomic effects of communication coordination about inflation between U.S. monetary and fiscal authorities. I construct a novel dataset of speeches, statements, and other policy documents from the Federal Reserve, the Treasury, the White House, and Congress spanning 1911-2025. I use this corpus to construct a Communication Coordination Index (CCI) that captures the extent to which monetary and fiscal authorities send aligned or divergent messages about inflation. To identify the causal effects of communication coordination, I exploit variation in the political proximity between FOMC members and the congressional majority as an external instrument. The results indicate sizable expansionary effects: a one-standard-deviation increase in the CCI, roughly one-third of the buildup observed during the post-pandemic inflation period, raises real GDP growth by 1.2 percentage points, lowers unemployment, increases hours worked and inflation, and raises interest rates in a manner consistent with a Taylor-rule-type policy response. Counterfactual analysis points to the decline in real economic uncertainty as a transmission mechanism. These findings establish communication coordination between monetary and fiscal authorities as an independent channel through which policy institutions affect macroeconomic outcomes.
Working Papers
Louder Than Rates: The Systematic Nature of Central Bank Communication (with Tiziana Assenza, Fabrice Collard, Philipp Wangner)
[CEPR Discussion Paper DP21691] [Policy & Media Coverage]
Abstract: Do central banks decide systematically how much to communicate when explaining their policy decisions? Using all U.S. Federal Open Market Committee policy statements since 1994, we measure communication effort through the change in Shannon entropy and estimate a forward-looking communication rule. We find that communication is systematic: the Federal Reserve communicates more when inflation is expected to exceed target and output is expected to fall below potential. This finding is robust across a variety of sensitivity exercises. We then develop a New Keynesian model with imperfect information showing that systematic communication acts as a second policy instrument, stabilizing expectations and complementing interest-rate policy, especially at the zero lower bound.
The Uncertainty Channel of Monetary Policy Communication
Abstract: This paper shows that central bank communication reduces monetary policy uncertainty, which in turn generates substantial effects on real economic activity. I construct a novel monthly measure of Federal Reserve communication from 9,298 speeches by FOMC members between 1951 and 2022 and relate it to a newspaper-based measure of U.S. monetary policy uncertainty. To address the simultaneity between communication and uncertainty, I exploit a shift in the volatility of communication associated with the Fed's transition toward greater transparency in the early 2000s and use the resulting heteroskedasticity to identify causal effects. An unexpected one-standard-deviation increase in communication lowers monetary policy uncertainty by about 0.25 standard deviations. Structural VAR estimates show sizable and persistent real effects: within two months, industrial production rises by about 0.3 percent, unemployment falls by 0.2 percentage points, and durable goods consumption increases by about 0.5 percent. These findings highlight an uncertainty channel of monetary policy communication and show that active communication can serve as an independent policy tool.
Work in Progress
Lost in Translation? The Impact of Fed Statements on Consumers (draft coming soon)
(with Tiziana Assenza, Fabrice Collard)