Job Market Paper
The Policy Duet: Coordination in U.S. Monetary—Fiscal Communication
Abstract: This paper examines how communication coordination between monetary and fiscal authorities affects macroeconomic outcomes. I construct a novel dataset of approximately 250,000 U.S. policy documents from the Fed, Treasury, White House, and Congress spanning 1911–2025. I then build a communication coordination index (CCI) based on messages about inflation. I instrument the CCI with political proximity between FOMC members and the congressional majority, drawing on the Fed’s accountability to Congress. The estimates show that a positive coordination shock is expansionary: output, inflation, and interest rates rise. Counterfactual analysis points to lower real economic uncertainty as the dominant transmission channel. A New Keynesian model with imperfect information explains how this channel operates. More coordinated messages improve households’ inference about future economic conditions, reducing uncertainty and precautionary saving and thereby stimulating aggregate demand. Higher demand raises output and inflation, and monetary policy responds by raising interest rates.
Working Papers
Louder Than Rates: The Systematic Nature of Central Bank Communication (with Tiziana Assenza, Fabrice Collard, Philipp Wangner)
[CEPR Discussion Paper DP21691] [TSE Working Paper N°1761][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 [Supplemental Appendix]
Abstract: This paper identifies an uncertainty channel of monetary policy communication: by reducing monetary policy uncertainty, communication stimulates real economic activity. I construct a monthly Federal Reserve communication measure from 9,298 FOMC member speeches and identify causal effects using heteroskedasticity around the Fed’s transition toward greater transparency in the early 2000s. A one-standard-deviation unexpected increase in communication lowers monetary policy uncertainty by about 0.25 standard deviations. Structural VAR estimates show that, within two months, industrial production rises by 0.3 percent, unemployment falls by 0.2 percentage points, and durable goods consumption increases by 0.5 percent.
Work in Progress
A Filtering Approach to News-Based Measures: Application to the EPU Index (with Christian Gouriéroux, Nour Meddahi, Serge Nyawa, Wenxuan Wang, Danfeng Yue)
Abstract: Text-based economic indices are widely used in empirical research, but their reliability depends on how they are built. Many of these indices are based on a dictionary of words and a set of newspapers, both chosen by the researcher. The resulting measures are sensitive to these choices and thus subject to measurement error. Drawing on the literature on volatility and realized volatility, we propose filtering methods, notably the Kalman filter, to reduce this error. We apply the approach to the Economic Policy Uncertainty (EPU) index of Baker, Bloom, and Davis (2016). In various regression analyses, the filtered index delivers more precise estimates and an improved empirical fit relative to the original measure. These findings show that filtering can make text-based economic indicators more reliable.