Findings on Investment Reported by Investigators at American University (Central Bank Mandates and Monetary Policy Stances: Through the Lens of Federal Reserve Speeches): Investment

2025 JUN 24 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- A new study on Investment is now available. According to news reporting from Washington, District of Columbia, by NewsRx journalists, research stated, “The Federal Reserve System has an institutional mandate to pursue price stability and maximum sustainable employment; however, it remains unclear whether it can also pursue secondary objectives. The academic literature has largely argued that it should not.”

The news correspondents obtained a quote from the research from American University, “We characterize the Fed’s interpretation of its mandate using state-of-the-art methods from natural language processing, including a collection of large language models (LLMs) that we modify for enhanced performance on central bank texts. We apply these methods and models to a comprehensive corpus of Fed speeches delivered between 1960 and 2022. We find that the Fed perceives financial stability to be the most important policy concern that is not directly enumerated in its mandate, especially in times when the debt-to-GDP ratio is high, but does not generally treat it as a separate policy objective.”

According to the news reporters, the research concluded: “In its policy discourse, it has frequently discussed the use of monetary policy to achieve financial stability, which we demonstrate generates movements in asset prices, even after rigorously controlling for macroeconomic and financial variables.”

This research has been peer-reviewed.

For more information on this research see: Central Bank Mandates and Monetary Policy Stances: Through the Lens of Federal Reserve Speeches. Journal of Econometrics, 2025;249. Journal of Econometrics can be contacted at: Elsevier Science Sa, PO Box 564, 1001 Lausanne, Switzerland. (Elsevier - www.elsevier.com; Journal of Econometrics - http://www.journals.elsevier.com/journal-of-econometrics/)

Our news journalists report that additional information may be obtained by contacting Robin L. Lumsdaine, American University, Kogod School of Business, 4400 Massachusetts Ave, NW, Washington, DC 20016, United States. Additional authors for this research include Christoph Bertsch, Xin Zhang and Isaiah Hull.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jeconom.2025.105948. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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