đź”– Reading List

Part I: The Only Game in Town: Central Banking

Session 1: Central Bank Communication and the Role of Expectation

In this session, we explore how central banks use communication as a powerful policy tool to shape market and household expectations. We will investigate how clear and relatable communication influences economic decisions and policy effectiveness. By examining empirical evidence and theories from prominent literature, you will gain insights into why the way central banks communicate matters profoundly for monetary policy outcomes

  1. Bholat, David, Nida Broughton, Janna Ter Meer, and Eryk Walczak. “Enhancing central bank communications using simple and relatable information.” Journal of Monetary Economics 108 (2019): 1-15.
  2. Binder, Carola. “Fed speak on main street: Central bank communication and household expectations.” Journal of Macroeconomics 52 (2017): 238-251.
  3. Blinder, Alan S., Michael Ehrmann, Marcel Fratzscher, Jakob De Haan, and David-Jan Jansen. “Central bank communication and monetary policy: A survey of theory and evidence.” Journal of economic literature 46, no. 4 (2008): 910-945.
  4. Kerssenfischer, Mark, and Maik Schmeling. “What moves markets?.” Journal of Monetary Economics 145 (2024): 103560.
  5. Blinder, Alan S., Michael Ehrmann, Jakob De Haan, and David-Jan Jansen. “Central bank communication with the general public: Promise or false hope?.” Journal of Economic Literature 62, no. 2 (2024): 425-457.
  6. Bohl, Martin T., Dimitrios Kanelis, and Pierre L. Siklos. “Central bank mandates: How differences can influence the content and tone of central bank communication.” Journal of International Money and Finance 130 (2023): 102752.
  7. Carlin, Wendy, and David W. Soskice. Macroeconomics: Institutions, instability, and inequality. Oxford University Press, 2024. Chapter 4
  8. Cieslak, Anna, and Andreas Schrimpf. “Non-monetary news in central bank communication.” Journal of International Economics 118 (2019): 293-315.
  9. Coibion, Olivier, Yuriy Gorodnichenko, and Michael Weber. “Monetary policy communications and their effects on household inflation expectations.” Journal of Political Economy 130, no. 6 (2022): 1537-1584.
  10. Ehrmann, Michael, and Alena Wabitsch. “Central bank communication with non-experts–A road to nowhere?.” Journal of Monetary Economics 127 (2022): 69-85.
  11. Hayo, Bernd, and Matthias Neuenkirch. “Central bank communication in the financial crisis: Evidence from a survey of financial market participants.” Journal of International Money and Finance 59 (2015): 166-181.
  12. Lamla, Michael J., and Dmitri V. Vinogradov. “Central bank announcements: Big news for little people?.” Journal of Monetary Economics 108 (2019): 21-38.

Session 2/3: High-frequency Analysis: News, Surprises and Financial Reactions

This session introduces methods for analysing financial market responses to monetary policy using high-frequency financial data and methods such as event studies. We will learn about the identification of monetary policy shocks, the role of market expectations, and how surprises in policy announcements affect asset prices in different financial markets such as stock, bond, and foreign exchange markets as well as commodity markets. Through classic and contemporary papers, you’ll understand the mechanics behind rapid market adjustments following central bank actions and statements.

  1. Altavilla, Carlo, Luca Brugnolini, Refet S. Gürkaynak, Roberto Motto, and Giuseppe Ragusa. “Measuring euro area monetary policy.” Journal of Monetary Economics 108 (2019): 162-179.
  2. Bernanke, B.S. and Kuttner, K.N., 2005. “What explains the stock market’s reaction to Federal Reserve policy?”. The Journal of Finance, 60(3)
  3. Braun, R., Miranda-Agrippino, S. and Saha, T., 2024. “Measuring monetary policy in the UK: The UK monetary policy event-study database”. Journal of Monetary Economics
  4. Gürkaynak, R.S. and Wright, J.H., 2013. “Identification and inference using event studies”. The Manchester School, 81
  5. Gürkaynak, R.S., Sack, B.P. and Swanson, E.T., 2004. “Do actions speak louder than words? The response of asset prices to monetary policy actions and statements”. The Response of Asset Prices to Monetary Policy Actions and Statements (May 2005).
  6. Gürkaynak, R.S., Kısacıkoğlu, B. and Wright, J.H., 2020. “Missing events in event studies: Identifying the effects of partially measured news surprises”. American Economic Review, 110(12)
  7. Gürkaynak, R., Karasoy-Can, H.G. and Lee, S.S., 2022. “Stock market’s assessment of monetary policy transmission: The cash flow effect”. The Journal of Finance, 77(4)
  8. Gürkaynak, R.S., Sack, B.P. and Swanson, E.T., 2007. “Market-based measures of monetary policy expectations”. Journal of Business & Economic Statistics, 25(2)
  9. Kuttner, K.N., 2001. “Monetary policy surprises and interest rates: Evidence from the Fed funds futures market”. Journal of Monetary Economics, 47(3)
  10. Rigobon, R., 2003. “Identification through heteroskedasticity”. Review of Economics and Statistics, 85(4)
  11. Rigobon, R. and Sack, B., 2004. “The impact of monetary policy on asset prices”. Journal of monetary economics, 51(8)
  12. Swanson, E.T., 2021. “Measuring the effects of Federal Reserve forward guidance and asset purchases on financial markets”. Journal of Monetary Economics, 118
  13. Wright, J.H., 2012. “What does monetary policy do to long-term interest rates at the zero lower bound?”. The Economic Journal, 122(564)
  14. Romer, C.D. and Romer, D.H., 2004. “A new measure of monetary shocks: Derivation and implications”. American economic review, 94(4), pp.1055-1084.

Session 3/4: Finance Meets Data Science: Extracting Information from Text

Here we discuss how modern data science techniques, particularly text mining and machine learning, are applied to economic research. We will explore how textual data from central bank documents can be systematically analysed to measure economic sentiments, policy uncertainty, and communication effectiveness. You will learn both the potential and challenges of employing computational methods for economic analysis. More importantly we will be more critical consumers of financial news and central bank communication. Note that we will not go into the details of the methods but rather focus on the applications. Thus, no programming is required for this session.

  1. Ash, E. and Hansen, S., 2023. “Text algorithms in economics”. Annual Review of Economics, 15(1)
  2. Armelius, H., Bertsch, C., Hull, I. and Zhang, X., 2020. “Spread the Word: International spillovers from central bank communication”. Journal of International Money and Finance, 103, p.102116.
  3. Baker, S.R., Bloom, N. and Davis, S.J., 2016. “Measuring economic policy uncertainty”. The quarterly journal of economics, 131(4), pp.1593-1636.
  4. Bholat, D., Hansen, S., Santos, P. and Schonhardt-Bailey, C., 2015. “Text mining for central banks”. Available at SSRN 2624811.
  5. Gentzkow, M., Kelly, B. and Taddy, M., 2019. “Text as data”. Journal of Economic Literature, 57(3)
  6. Grimmer, J. and Stewart, B.M., 2013. “Text as data: The promise and pitfalls of automatic content analysis methods for political texts”. Political analysis, 21(3)
  7. Hansen, S. and McMahon, M., 2016. “Shocking language: Understanding the macroeconomic effects of central bank communication”. Journal of International Economics, 99
  8. Hansen, S., McMahon, M. and Prat, A., 2018. “Transparency and deliberation within the FOMC: A computational linguistics approach”. The Quarterly Journal of Economics, 133(2)
  9. Hansen, S., 2018. “Machine Learning for Economics and Policy”. Social and Economics Studies, 5, pp.369-397.

Part II: Dancing Together: Financial Globalisation, Risk Sharing, and Spillovers

Session 5: Dancing Together: Financial Globalisation, Risk Sharing, and Spillovers

In this session, we examine how financial globalisation impacts economic synchronisation, risk sharing, and crisis transmission across countries. We will analyse how global financial interconnectedness affects economic stability and the propagation of financial shocks. By reviewing influential studies, you will better understand the roles of global banks, financial regulation, and international linkages in shaping macroeconomic outcomes and risks.

  1. Kalemli-Ozcan, S., Papaioannou, E. and Peydro, J.L., 2013. “Financial regulation, financial globalization, and the synchronization of economic activity”. The Journal of Finance, 68(3), pp.1179-1228.
  2. Kalemli-Ozcan, S., Papaioannou, E. and Perri, F., 2013. “Global banks and crisis transmission”. Journal of international Economics, 89(2), pp.495-510.
  3. Kose, M. Ayhan and Prasad, Eswar S. and Terrones, Marco E., 2007. “How Does Financial Globalization Affect Risk Sharing? Patterns and Channels”. IZA Discussion Paper No. 2903, Available at
  4. Kose, M.A., Prasad, E.S. and Terrones, M.E., 2009. “Does financial globalization promote risk sharing?”. Journal of Development Economics, 89(2), pp.258-270.
  5. Pescatori, A., 2013. “Press points for chapter 3: Dancing together? spillovers, common shocks, and the role of financial and trade linkages”. World economic outlook.
  6. Rogoff, Kenneth, and Maurice Obstfeld. 1996. Foundations of International Macroeconomics. Cambridge, Massachusetts: MIT Press. Section 5

Part III: International Capital Mobility and Capital Controls

Session 6: International Capital Market Integration

This session provides foundational knowledge about international capital flows, exchange rate determination, and their macroeconomic implications. We will examine how openness to international capital markets affects economic stability and policy choices. The readings will equip you to critically assess the role of international finance in shaping macroeconomic outcomes.

  1. Schmitt-Grohé, S., Uribe, M. and Woodford, M., 2022. International macroeconomics: A modern approach. Princeton University Press. Chapter 11

Session 7: Capital Controls

We will explore why governments implement capital controls and their effectiveness in managing economic volatility and crises. By discussing key theoretical insights and empirical evidence, you will appreciate the rationale, limitations, and practical consequences of restricting cross-border financial transactions. The provided literature offers both historical context and current perspectives on this contentious policy tool.

  1. Schmitt-Grohé, S., Uribe, M. and Woodford, M., 2022. International macroeconomics: A modern approach. Princeton University Press. Chapter 12

Part IV: Quantitative Easing, Quantitative Tightening, and Beyond (If time permits)

Session 8: Unconventional Monetary Policy

In this session, we explore the rationale, implementation, and international repercussions of unconventional monetary policy tools, especially quantitative easing and tightening. Key readings detail the effectiveness, transmission channels, and spillover effects of these policies, addressing how they influence asset prices, economic activity, and financial stability. You will understand central banks’ strategies for expanding or contracting their balance sheets to manage economic crises and guide market expectations globally.

  1. Bernanke, B.S., 2020. “The new tools of monetary policy”. American Economic Review, 110(4), pp.943-983.
  2. Bhattarai, S. and Neely, C.J., 2022. “An analysis of the literature on international unconventional monetary policy”. Journal of Economic Literature, 60(2), pp.527-597.
  3. Bauer, M.D. and Neely, C.J., 2014. “International channels of the Fed’s unconventional monetary policy”. Journal of International Money and Finance, 44, pp.24-46
  4. Fratzscher, M., Lo Duca, M. and Straub, R., 2018. “On the international spillovers of US quantitative easing”. The Economic Journal, 128(608), pp.330-377
  5. Gertler, M. and Karadi, P., 2018. “Qe 1 vs. 2 vs. 3…: A framework for analyzing large-scale asset purchases as a monetary policy tool”. 29th issue (January 2013) of the International Journal of Central Banking.
  6. Kuttner, K.N., 2018. “Outside the box: Unconventional monetary policy in the great recession and beyond”. Journal of Economic Perspectives, 32(4), pp.121-146.
  7. Neely, C.J., 2015. “Unconventional monetary policy had large international effects”. Journal of Banking & Finance, 52, pp.101-111.
  8. Rossi, B., 2021. “Identifying and estimating the effects of unconventional monetary policy: How to do it and what have we learned?”. The Econometrics Journal, 24(1), pp.C1-C32.
  9. Sims, E.R. and Wu, J.C., 2020. “Wall Street vs. Main Street QE (No. w27295)”. National Bureau of Economic Research.
  10. Tillmann, P., 2016. “Unconventional monetary policy and the spillovers to emerging markets”. Journal of International Money and Finance, 66, pp.136-156.