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The hidden cost of transparency pledges

Harmon, Derek (2020) The hidden cost of transparency pledges. LSE Business Review (18 Dec 2020). Blog Entry.

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Abstract

Leaders often make pledges of transparency to signal honesty and instil confidence. But what if they instead are sowing seeds of doubt? In a recent paper examining Federal Reserve communications, that’s exactly what I found. The study analyses seventeen years of speeches by the Fed chair, and looks at the effect these speeches have on the VIX Volatility Index, or “fear gauge.” What I show is that the more the chair tried to calm the market by being transparent about their objectives and policy framework, the more volatile the market became.

Item Type: Online resource (Blog Entry)
Official URL: https://blogs.lse.ac.uk/businessreview/
Additional Information: © 2020 The Author
Divisions: LSE
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Date Deposited: 26 Jan 2021 10:36
Last Modified: 24 Jun 2021 23:29
URI: http://eprints.lse.ac.uk/id/eprint/108260

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