Working Paper: CEPR ID: DP14265
Authors: Andrew Haldane; Alistair Macaulay; Michael McMahon
Abstract: In this paper we explore both theoretical and empirical evidence on communication with the general public. The model provides guidance for policy makers by high- lighting some potentially important risks in communicating simply with a broader audience. In particular, in a model where trust and engagement are low, there are benefits to engaging a wider audience. But doing so risks ultimately lowering welfare unless guided by the 3 E's of public communication: Explanation, Engagement and Education. Central banks have made great strides in all three, but numerous challenges remain.
Keywords: monetary policy; communication; general public
JEL Codes: E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| simplified communication (L96) | increased public engagement (D72) |
| simplified communication (L96) | increased trust in the central bank (E58) |
| increased public engagement (D72) | increased trust in the central bank (E58) |
| failure to meet expectations (D84) | decreased trust in the central bank (E58) |
| simplified communication (L96) | disappointment when actual outcomes deviate from expectations (D84) |
| disappointment when actual outcomes deviate from expectations (D84) | decreased trust in the central bank (E58) |
| lack of understanding and trust (D83) | impeded efficacy of monetary policy (E52) |