Federal Reserve Communication and the Media
37 Pages Posted: 8 Sep 2016
Date Written: September 6, 2016
The effectiveness of monetary policy and the political legitimacy of the Federal Reserve depend on monetary policymakers' ability to communicate with the public, which in turn depends in part on the news media. While the finance and economics literature has investigated select aspects of monetary policy communication, the literature in this area remains disconnected from other relevant social science theories and techniques, most notably in political communication and media studies. I construct a database of all speeches and testimonies by the Fed Chair, Federal Open Market Committee meetings, press conferences, and major announcements regarding the Fed's Quantitative Ease programs from 2007 through 2011. I merge these event dates with a database of 310,565 news stories from television, radio, online sites, and newspapers to analyze news coverage of the Fed in different media sectors and the ability of Fed communications to influence media coverage. Drawing from the literature on newsworthiness and agenda-building, I develop and test a number of hypotheses concerning the overall volume of coverage of the Fed, the distribution of coverage across topics and across media sectors, and the response of coverage in different sectors to different types of communication events. I find that coverage of the Fed is less frequent than coverage of the President and tends to focus on negative or politically controversial topics. The Fed receives a smaller share of its coverage from cable television and more from online news sites. Communication events, especially the newly-introduced press conferences, result in significantly higher media coverage of the Fed, though effects vary across media sectors. Though the Fed and its Chair have some ability to lead news coverage through communication efforts, the Congressional agenda also influences the media's coverage of the Fed.
Keywords: monetary policy, Federal Reserve communication, political communication, agenda-building, media analysis, news coverage
JEL Classification: E31, E50, E52, E58, E59, D10
Suggested Citation: Suggested Citation