Marianna Grimaldi

The Information Content of Central Bank Minutes

One characteristic feature of central banks today is that policy decisions are almost exclusively made by a committee rather than by a single policy maker. Another is that central banks are considerably more transparent than they used to be. Together, this has brought to the fore an important but so far unresolved issue: to what extent should a central bank’s communication reflect the full spectrum of opinions among its committee members? Does information on all members’ views make monetary policy easier to understand and predict, or does it make it harder? We address this issue by employing a novel method. We measure the sentiment and tone of the minutes of the Swedish central bank using an automated content analysis that converts the qualitative information in the minutes to a quantitative measure. We find that this measure is useful in predicting future policy rate decisions.

Intervention in the Foreign Exchange Market in a Model with Noise Traders

A clip nut is provided having a plastic body holding captive a nut. The body includes two aligned arms projecting from an aft section, each arm defining an aperture at a forward portion of the arm. The nut includes a base and a upstanding portion extending from the base that defines an internally threaded bore. The body further includes a nut cage positioned disposed about the aperture of the first arm. The nut cage includes an upper wall spaced above the first arm that defines a slot having a narrowed inlet and a recess aligned with the apertures of the first and second arms. The body is configured to readily and securely receive the nut. To insert the nut into the cage, the nut is forced against the nut cage such that the upstanding portion presses into and past the narrowed inlet. In this manner, the cage yieldably receives the nut without undue manipulation of either piece.

Heterogeneous Agents and Non-Normal Fundamentals

This paper proposes an explanation for the disconnect puzzle between exchange rates and macro-economic variables in variance and extremes. We insert a fundamental rate with financial market characteristics into a heterogeneous agents model and simulate exchange rates in order to examine whether the model replicates the disconnect puzzle in higher moments. The simulations are consistent with reality if the exchange rate is detached from the fundamental rate, i.e. if there is a bubble. This implies that the disconnect puzzle can be explained by the fact that the market is in a constant bubble state, caused by a high proportion of technical analysts active in the market.