Impact of Implicit Disagreement in MPC meetings on long run Government Bond Yields: A Panel Analysis

Abstract

This study focuses on the impact of implicit disagreement among MPC members of UK, Australia, Japan and South Korea on long-term government bond yields. The implicit disagreement measures are constructed in the context of inflation using NLP techniques specifically trained on FOMC meetings’ minutes. We see that disagreement(inflation) has a positive and significant impact on long-term government bond yields. Unlike postulates in the existing literature, the findings of this study establish the importance of disagreement in guiding movements in bond yields and thereby advocate incorporating it into important policy discussions that influence the economic health of nations.