Sinem Kandemir

Research Interest

Macroeconomics, Monetary Policy, Central Bank Communication, Geopolitical Risk, Natural Language Processing

The Emotions of Monetary Policy 

with Mamadou-Lamine Barry, Brenton Joey Bruns, Jens Klose, Victor Smirnov and Peter Tillmann, March 2025

covered by Financial Times (FT Alphaville) and Reuters

Abstract: We study the full scope of the communication of the ECB presidents during the post-meeting press conferences at a high frequency. Based on advances in facial and vocal recognition software and natural language processing, we not just quantify the spoken word of the ECB president, but also measure facial and vocal expressions at the minute frequency. First, the nature and the intensity of emotions differ between President Draghi and President Lagarde as well as between the introductory statement and the Q&A part of the press conferences. Second, average facial expressions during a press conference are correlated with inflation. Third, facial expressions and vocal arousal can moderate or amplify a hawkish policy message. In particular, positive emotions can support forward guidance statements of the ECB president.

Geopolitics in the Boardroom: How German Managers Respond to the War in Ukraine
with Moritz Grebe and Peter Tillmann, October 2024
covered by FAZ, [data]

Abstract: We use unique daily data from the German Business Panel, a survey among German managers, to estimate the impact of uncertainty about the war in Ukraine on managerial plans and expectations. Each workday, the online survey invites a random set of firms to answer a standard set of questions. War-related uncertainty is extracted from a corpus of more than eight million German-language Twitter messages about the war in Ukraine. Higher uncertainty has strong adverse effects by prompting firms to plan higher prices and expect a drop in dividends, revenues, profits and investment. The persistent fall in expected R&D expenditure suggests that the shock has consequences for long-run productivity growth. Managers’ satisfaction with economic policy increases after an uncertainty shock. The sensitivity of managers with respect to war-related uncertainty depends on the overall level of geopolitical risk.

Uncertainty about the War in Ukraine: Measurement and Effects on the German Economy
with Moritz Grebe and Peter Tillmann
Journal of Economic Behavior and Organization 217 (2024) 493–506, [data]

Abstract: We assemble a data set of more than eight million German Twitter posts related to the war in Ukraine. Based on state-of-the-art methods of text analysis, we construct a daily index of uncertainty about the war as perceived by German Twitter. The approach also allows us to separate this index into uncertainty about sanctions against Russia, energy policy and other dimensions. We then estimate a VAR model with daily financial and macroeconomic data and identify an exogenous uncertainty shock. The increase in uncertainty has strong effects on financial markets and causes a significant decline in economic activity as well as an increase in expected inflation. We find the effects of uncertainty to be particularly strong in the first months of the war.  

Not all ECB Meetings are Created Equal

with Peter Tillmann, August 2024

Abstract: Most meetings of the Governing Council of the ECB take place intra muros at the ECB's premises in Frankfurt. Some meetings, however, are held extra muros, i.e. outside Frankfurt, hosted by one of the national central banks. This paper uses high-frequency surprises from meeting days to show that the standard deviation of surprises is higher when the ECB meets intra muros. This difference is mostly due to larger timing, forward guidance and QE surprises when meeting in Frankfurt. We show that the transmission of policy surprises to longer-term interest rates is significantly weaker when meeting extra muros. In addition, when the meeting takes place extra muros, the wording of the ECB communication during the press conference is significantly more similar to the preceding meeting. The results suggest that the important decisions are taken in Frankfurt and that the ECB avoids large changes to the policy path when meeting extra muros. The difference across meeting types has consequences for the macroeconomic impact of monetary policy.