Our weekly SRI Seminar Series welcomes Michelle Alexopoulos, a professor of economics at the University of Toronto, deputy vice-president of the Canadian Economics Association, a fellow of the Bank of Canada, and a faculty affiliate of the Schwartz Reisman Institute, Data Sciences Institute, and School of Cities at U of T. Alexopoulos is a macroeconomist whose research focuses on business cycles, monetary policy, technical change, economic uncertainty, labor markets and productivity.
In this talk, Alexopoulos will discuss recent research on the applications of AI to monetary policy communications, and her ongoing project with researchers at the Bank of Canada that analyzes the effects of emotional cues by the Chairs of the U.S. Federal Reserve on financial markets during congressional testimonies. Using machine learning, Alexopoulos explores how the affective tone of policy makers can shape market responses, and how to improve on communication strategies.
Talk title:
“It’s not just what they, say but how they say it! Using AI to understand the impact of policy statements on markets”
Abstract:
Economic policies enacted by the government and its agencies have large impacts on the welfare of businesses and individuals—especially those related to fiscal and monetary policy. Communicating the details of the policies to the public is an important and complex undertaking. Policymakers tasked with the communication not only need to present complicated information in simple and relatable terms, but they also need to be credible and convincing—all the while being at the center of the media's spotlight. In this talk, I will discuss recent research on the applications of AI to monetary policy communications, and lessons learned to date. In particular, I will report on my recent ongoing project with researchers at the Bank of Canada that analyzes the effects of emotional cues by the Chairs of the U.S. Federal Reserve on financial markets during congressional testimonies. While most previous work has mainly focused on the effects of a central bank's highly scripted messages about its rate decisions delivered by its leader, we use tools to study the both the messages and the messengers’ delivery of them. I will review how we apply recent advances in machine learning and big data to construct measures of Federal Reserve Chair’s emotions, expressed via his or her words, voice, and face, as well as discuss challenges encountered and our findings to date. In all, our initial results highlight the salience of the Fed Chair’s emotional cues for shaping market responses to Fed communications. Understanding the effects of non-verbal communication and responses to verbal cues may help policy makers improve upon their communication strategies going forward.
About Michelle Alexopoulos
Michelle Alexopoulos is a professor of economics at the University of Toronto with a cross appointment to the Faculty of Information. She is currently the deputy vice-president of the Canadian Economics Association, a fellow of the Bank of Canada, a Canadian Productivity Partnership collaborator, and a faculty affiliate at the Schwartz Reisman Institute for Technology and Society, the Data Sciences Institute, and the School of Cities at U of T. Alexopoulos is a macroeconomist whose research focuses on business cycles, monetary policy, technical change, economic uncertainty, labor markets and productivity. Her research, supported by numerous public and private grants, has been published in top tier economics journals, and has been presented at numerous central banks, international conferences, academic departments, and the National Academy of Sciences.
About the SRI Seminar Series
The SRI Seminar Series brings together the Schwartz Reisman community and beyond for a robust exchange of ideas that advance scholarship at the intersection of technology and society. Seminars are led by a leading or emerging scholar and feature extensive discussion.
Each week, a featured speaker will present for 45 minutes, followed by 45 minutes of discussion. Registered attendees will be emailed a Zoom link approximately one hour before the event begins. The event will be recorded and posted online.
Michelle Alexopoulos