Abstract

http://ssrn.com/abstract=246837
 
 

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Do Words Speak Louder than Actions? The Conduct of Monetary Policy at the Bundesbank


Martin T. Bohl


University of Muenster

Pierre L. Siklos


Wilfrid Laurier University - School of Business & Economics

October 2000


Abstract:     
This paper proposes that an important tenet of monetary policy, as practiced by the Bundesbank, is how it communicates with the public. The results have implications for the conduct of monetary policy more generally. Indeed, recent Fed behavior may also be likened to the experience of the Bundesbank. We argue that communication by senior central bank officials represents an instrument of monetary policy which supplements discount rate changes or announcements of target growth rates for the money supply. Moreover, the communications instrument can help exlain how a central bank can deal with the uncertainties inherent in monetary policy not transmitted via frequent changes in in interest rates or money growth targets. Empirical evidence, using monthly data, shows how speeches, especially by the Bundesbank's President, are linked to interest rate behavior.

Number of Pages in PDF File: 31

Keywords: Bundesbank, reaction function, central bank communication

JEL Classification: E52,E58,C31,C32,C53

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Date posted: November 21, 2000  

Suggested Citation

Bohl, Martin T. and Siklos, Pierre L., Do Words Speak Louder than Actions? The Conduct of Monetary Policy at the Bundesbank (October 2000). Available at SSRN: http://ssrn.com/abstract=246837 or http://dx.doi.org/10.2139/ssrn.246837

Contact Information

Martin T. Bohl
University of Muenster ( email )
D-48149 Muenster
Germany
Pierre L. Siklos (Contact Author)
Wilfrid Laurier University - School of Business & Economics ( email )
Department of Economics
75 University Avenue W.
Waterloo, Ontario N2L 3C5
Canada
519-884-0710 Ext. 2559 (Phone)
519-888-1015 (Fax)
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