What Say They About Their Mandate? A Textual Assessment of Federal Reserve Speeches
91 Pages Posted: 2 Oct 2019
Date Written: August 14, 2019
Abstract
This paper considers the extent to which the Federal Reserve has balanced the responsibilities set out by its dual mandate and whether, in the aftermath of the 2007-8 financial crisis, the Federal Reserve effectively adopted a third mandate of ensuring financial stability and mitigating systemic risk. We do this by analyzing officials’ speeches using a variety of text-processing techniques. We find that the price stability emphasis that existed before the crisis gave way to a focus on employment conditions as the crisis unfolded. Additionally, we indeed find an increasing role for financial stability in the post-crisis period.
Keywords: Financial Stability, Dual Mandate, FOMC, Latent Dirichlet Allocation (LDA), Dynamic Topic Model
JEL Classification: E58, E61, C54, C63, E02
Suggested Citation: Suggested Citation