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:	11 Dec 2024 20:27
URI:	http://eprints.lse.ac.uk/id/eprint/108260

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