Cosine Similarity Scores for Central Bank Monetary Policy Statements: An Empirical Analysis of FED Press Releases

Mehmet Fatih Görgün; Erhan Demireli

Article Details

Cosine Similarity Scores for Central Bank Monetary Policy Statements: An Empirical Analysis of FED Press Releases

Authors:

Mehmet Fatih Görgün | Erhan Demireli

Publisher:

Kütahya Dumlupinar University

Main Topics:

Finans

Journal:

Uluslararası Sosyal ve Ekonomik Çalışmalar Dergisi Vol.5 Issue 1, pp.58-77

Document Type:

Article

Publication Date:

5/2024

Document Language:

Turkish

Document ID (Org No.):

2001322145

pISSN:

2757-6582

Keywords:

Abstract:

 This study aims to analyze the monetary policy texts of the Federal Open Market Committee FOMC through similarity analysis. Text similarity scores are calculated using the cosine similarity theory to identify the content similarity between consecutive press releases. The results of the analysis show that the content of FOMC releases is significantly similar in certain periods and that these similarities are shaped by changes in economic conditions, but that the population behaves differently despite similar policy texts in response to changes in economic conditions. Among the interesting results of the study are that similarities provide consistency and reliability regarding the FOMCs policy decisions, but may create uncertainty and reduce the effectiveness of the FEDs communication. The study also aims to contribute to the literature by highlighting the potential of using natural language processing NLP tools in the analysis of central bank communications.

 This study aims to analyze the monetary policy texts of the Federal Open Market Committee FOMC through similarity analysis. Text similarity scores are calculated using the cosine similarity theory to identify the content similarity between consecutive press releases. The results of the analysis show that the content of FOMC releases is significantly similar in certain periods and that these similarities are shaped by changes in economic conditions, but that the population behaves differently despite similar policy texts in response to changes in economic conditions. Among the interesting results of the study are that similarities provide consistency and reliability regarding the FOMCs policy decisions, but may create uncertainty and reduce the effectiveness of the FEDs communication. The study also aims to contribute to the literature by highlighting the potential of using natural language processing NLP tools in the analysis of central bank communications.

 This study aims to analyze the monetary policy texts of the Federal Open Market Committee FOMC through similarity analysis. Text similarity scores are calculated using the cosine similarity theory to identify the content similarity between consecutive press releases. The results of the analysis show that the content of FOMC releases is significantly similar in certain periods and that these similarities are shaped by changes in economic conditions, but that the population behaves differently despite similar policy texts in response to changes in economic conditions. Among the interesting results of the study are that similarities provide consistency and reliability regarding the FOMCs policy decisions, but may create uncertainty and reduce the effectiveness of the FEDs communication. The study also aims to contribute to the literature by highlighting the potential of using natural language processing NLP tools in the analysis of central bank communications.

 Bu çalışma, Federal Açık Piyasa Komitesinin FOMC para politikası metinlerinin benzerlik analizi yoluyla incelenmesini amaçlamaktadır. Metin benzerlik skorları, ardışık duyurular arasındaki içerik benzerliğini belirlemek için kosinüs benzerliği teorisi kullanılarak hesaplanmıştır. Analiz sonuçları, belirli dönemlerde FOMC duyurularının içeriğinin önemli ölçüde benzeştiğini ve bu benzerliklerin ekonomik koşullardaki değişikliklere bağlı olarak şekillendiğini ancak nüfusun ekonomik koşullardaki değişimi dikkate alarak benzer politika metinlerine rağmen farklı davranışlar sergilediğini göstermektedir. Benzerliklerin, FOMCnin politika kararlarına ilişkin tutarlılık ve güvenilirlik sağladığı, ancak belirsizlikler yaratabildiği ve FEDin iletişim etkinliğini azaltabileceği çalışmanın ilgi çekici sonuçları arasındadır. Çalışma, ayrıca doğal dil işleme NLP araçlarının merkez bankası iletişimlerinin analizinde kullanımının potansiyelini vurgulayarak literatüre katkı sağlamayı amaçlamaktadır.

Article Details

Cosine Similarity Scores for Central Bank Monetary Policy Statements: An Empirical Analysis of FED Press Releases

Authors:

Mehmet Fatih Görgün | Erhan Demireli

Publisher:

Kütahya Dumlupinar University

Main Topics:

Finans

Journal:

Uluslararası Sosyal ve Ekonomik Çalışmalar Dergisi Vol.5 Issue 1, pp.58-77

Document Type:

Article

Publication Date:

5/2024

Document Language:

Turkish

Document ID (Org No.):

2001322145

pISSN:

2757-6582

FED

FOMC

Cosine Similarity

Natural Language Processing (NLP)FED

FOMC

Kosinüs Benzerliği

Doğal Dil İşleme (NLP)

Issues

Article Details

Authors: Mehmet Fatih Görgün | Erhan Demireli

Publisher: Kütahya Dumlupinar University

Main Topics: Finans

Journal: Uluslararası Sosyal ve Ekonomik Çalışmalar Dergisi Vol.5 Issue 1, pp.58-77

Document Type: Article

Publication Date: 5/2024

Document Language: Turkish

Document ID (Org No.): 2001322145

pISSN: 2757-6582

Issues

Authors:

Mehmet Fatih Görgün | Erhan Demireli

Publisher:

Kütahya Dumlupinar University

Main Topics:

Finans

Journal:

Uluslararası Sosyal ve Ekonomik Çalışmalar Dergisi Vol.5 Issue 1, pp.58-77

Document Type:

Article

Publication Date:

5/2024

Document Language:

Turkish

Document ID (Org No.):

2001322145

pISSN:

2757-6582