FOMC Responses to Calls for Transparency: Evidence from the Minutes and Transcripts Using Latent Semantic Analysis

<a href="https://embed.stanford.edu/iframe/?url=https%3A%2F%2Fpurl.stanford.edu%2Fqs086rg2081" class="su-underline">Show Content</a>

Abstract/Contents

Abstract: The Federal Reserve has become increasingly transparent in recent years in response to both internal inclinations and external calls from Congress and the private sector, yet it has stopped short of holding open FOMC meetings. Instead, the Fed releases minutes and statements to summarize its policy decisions. This paper applies Latent Semantic Analysis to FOMC transcripts and minutes from 1976—2008 in order to analyze the FOMC’s responses to calls for transparency. It reveals that two notable events explain much of the variation in transparency over this 32-year period. First, the 1978 Humphrey-Hawkins Act increased the degree to which the FOMC used meeting minutes to convey the content of its meetings. Historical evidence suggests that this was done because the Act required the Fed to tie its objectives to short-run Congressional and Presidential economic goals. Second, the 1993 decision to publish nearly verbatim transcripts also increased transparency. However, the cost was a decreasing degree of deliberation at each meeting, as evidenced by lower variance in content disagreement at the member level. By applying LSA to FOMC documents, this study presents a unique way of quantifying transparency and suggests LSA’s usefulness to other empirical studies in Economics.

Type of resource	text
Date created	May 2014

Author	Acosta, J. Miguel
Primary advisor	Taylor, John B.
Degree granting institution	Stanford University, Department of Economics

Subject	Federal Open Market Committee
Subject	Deliberation
Subject	NLP
Subject	Central Bank
Subject	Stanford University
Subject	Department of Economics
Genre	Thesis

Related item	Title 2014 Firestone Medal for Excellence in Undergraduate Research
Location	https://purl.stanford.edu/qs086rg2081

Use and reproduction: User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.

Preferred Citation: Acosta, J. Miguel. (2014). FOMC Responses to Calls for Transparency: Evidence from the Minutes and Transcripts Using Latent Semantic Analysis. Stanford Digital Repository. Available at: https://purl.stanford.edu/qs086rg2081

Stanford University, Department of Economics, Honors Theses

Loading usage metrics...