Unconventional Monetary Policy Surprises: Delphic or Odyssean?

35 Pages Posted: 11 Jun 2020

See all articles by Derin Aksit

Derin Aksit

Johns Hopkins University - Department of Economics

Date Written: April 15, 2020

Abstract

Central bank communication could be interpreted in two ways, either as central bank's commitment to a future action, known as Odyssean guidance, or its forecast of future economic conditions, known as Delphic guidance. The empirical literature has identified the Delphic and Odyssean components of forward guidance policies. I show that another unconventional policy tool, large-scale asset purchases, can also be empirically decomposed into Delphic and Odyssean components, and these two components have opposing impacts on macroeconomic expectations in the US along with other advanced and emerging market economies. Finally, I estimate the asset price responses to Delphic and Odyssean policies.

Keywords: Unconventional Monetary Policies, Delphic and Odyssean Policies, Expectations, Signalling

JEL Classification: E52, E44, E58

Suggested Citation

Aksit, Derin, Unconventional Monetary Policy Surprises: Delphic or Odyssean? (April 15, 2020). Available at SSRN: https://ssrn.com/abstract=3602291 or http://dx.doi.org/10.2139/ssrn.3602291

Derin Aksit (Contact Author)

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

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