Causality Analysis of South Africa Reserve Bank’s Monetary Policy Statements and Communication

Abstract

This paper inspects whether the South Africa Reserve Bank’s (SARB) Monetary Policy Committee (MPC) statements trigger have a causality with newspaper reports from the Mail and Guardian between 2010 and 2021. The study examines whether SARB’s post MPC statements’ readability is reciprocated in the subsequent Mail and Guardian newspaper articles. Using the Flesch Reading Ease Score and Flesch-Kincaid Grade Level score as the methodology, there is a systematic unpacking of both SARB’s MPC statements and newspaper reports from the Mail and Guardian which yield a dataset which is subsequently used to create a computation. This computation is then used to examine whether SARB’s MPC statements Granger cause the subsequent Mail and Guardian newspaper articles. Resultantly, the results show that there is no Granger causality between the SARB’s MPC statements and the Mail and Guardian’s Flesch Reading Ease Score and Flesch-Kincaid Grade Level score.

Keywords: {'name': 'central bank communication'}, {'name': 'South African Reserve Bank'}, {'name': 'Monetary Policy Committee statements'}, {'name': 'Flesch-Kincaid Grade Level score'}, {'name': 'Granger causality'}, {'name': 'Flesch Reading Ease Score'}

Authors & affiliations

Arnold Segawa
Affiliation not supplied

Deposited references

Supplied references, not a list of publications citing this article.

DOI: 10.1111/j.1538-4616.2011.00392.x

Bernanke, B. (2010). Monetary Policy Objectives and Tools in a Low-Inflation Environment, Speech at the Federal Reserve Bank of Boston (Revisiting Monetary Policy in a Low-Inflation Environment Conference).

Blinder, A., & Wyplosz, C. (2004). Central Bank Talk: Committee Structure and Communication Policy, prepared for the session on “Central Bank Communication” at the ASSA meetings. Philadelphia, January 9th.

DOI: 10.1257/jel.46.4.910

DOI: 10.1162/jeea_a_00025

DOI: 10.1111/j.1468-0300.2009.00208.x

DOI: 10.1016/j.ejpoleco.2012.06.001

DOI: 10.2139/ssrn.602763

DOI: 10.1080/20780389.2021.1925106

Filardo, A., Hubert, P., & Rungcharoenkitkul. (2019). The reaction function channel of monetary policy and the financial cycle, No 816, BIS Working Papers, Bank for International Settlements

DOI: 10.1037/h0057532

Flesch, R. (1979). How to write plain English: A book for lawyers and consumers. New York: Harper & Row.

Fracasso, A., Genberg, H., & Wyplosz, C. (2003). How do central banks write? An evaluation of inflation reports by inflation targeting central banks International Center for Monetary and Banking Studies, Centre for Economic Policy Research (Great Britain), & Norges bank. (Ser. Geneva reports on the world economy. special report, 2). International Center for Monetary and Banking Studies.

DOI: 10.3102/0013189X11413260

DOI: 10.2307/1912791

DOI: 10.1086/499414

DOI: 10.3982/ECTA7195

Hayo, B., Kutan, A., & Neuenkirch, M. (2008), Communicating with Many Tongues: FOMC Speeches, Media Coverage, and U.S. Financial Market Reaction, MAGKS Joint Discussion Paper Series in Economics 08–2008.

Hensel, H. (2014). Validation of the Flesch-Kincaid Grade Level within the Dutch educational system. Available from: https://essay.utwente.nl/64884/1/Hensel,%20T.N.C.A.%20-%20s0170860%20(verslag).pdf

DOI: 10.20955/r.87.65-83

DOI: 10.1111/j.1465-7287.2010.00238.x

DOI: 10.1016/j.econmod.2014.11.002

Katz, E., Lazarsfeld, P. F., & Columbia University. Bureau of Applied Social Research. (1955). Personal influence: the part played by people in the flow of mass communications (Ser. Foundations of communications research). Free Press

DOI: 10.21236/ADA006655

Luangaram, P., & Wongwachara, W. (2017). More Than Words: A Textual Analysis of Monetary Policy Communication, PIER Discussion Papers, Puey Ungphakorn Institute for Economic Research, https://EconPapers.repec.org/RePEc:pui:dpaper:54.

DOI: 10.1086/267990

Quarterly, Vol.36(2): 176-187

DOI: 10.3386/w10646

DOI: 10.1080/00036846.2016.1254346

Neuenkirch, M. (2009). Studies on us and Canadian central bank communication (Unpublished doctoral dissertation).

DOI: 10.2139/ssrn.3686904

Reid, M. (2011a). Communication as a Strategic Monetary Policy Tool: An Evaluation of the Effectiveness of the South African Reserve Bank’s Communication. Stellenbosch University, Department of Economics. (Unpublished doctoral dissertation)

Reid, M. (2011b). Talking to the Inattentive Public: How the media transforms the Reserve Bank’s communications. Stellenbosch University, Department of Economics: 19/2011.

DOI: 10.1080/00213624.2020.1787045

Segawa, A. (2018). Media coverage of South Africa Reserve Bank Monetary policy committee work: A case study of CNBC Africa 2014-2017. University of the Witwatersrand, Department Journalism. (Masters dissertation).

South African Reserve Bank. (2006). Communications Policy. Pretoria: South African Reserve Bank.

DOI: 10.1016/S0304-3932(99)00007-0

Svensson, L. E. O. (2010). Inflation Targeting (2010). NBER Working Paper No. w16654, Available at SSRN: https://ssrn.com/abstract=1732924