Brookings Economic Studies – Twitter and the Federal Reserve: How the U.S. central bank is (and is not) surviving social media. Peter Conti-Brown and Brian Feinstein Thursday, October 29, 2020.
This paper seeks to connect these two discussions—about the Fed’s efforts to increase its communications and the president’s use of Twitter to attack the Fed’s monetary policy decisions—by focusing on how the Fed uses Twitter, a relatively new and surprisingly powerful medium on which officials communicate directly with citizens, reporters break news, and ordinary people across the globe engage in direct conversation with each other. While other scholars have assessed the impact of Twitter on interest rates and central bank communications have become a growing area of other scholarly concern this is the first effort of which we are aware to document how the Fed uses Twitter and how Twitter users—especially President Trump—engage the Fed.
The effort produces three key findings. First, we identify patterns of usage among Federal Reserve entities and compare these patterns to those at other agencies and central banks. We learn that the Fed’s Reserve Banks are more prolific users of Twitter than the Fed’s Board of Governors (Board), but the Board has higher engagement with Twitter users. The Fed, as a whole, is also an average Twitter user compared to other central banks, more active than other independent agencies, but less than executive departments. Second, Twitter users don’t generally like the Fed. That is, although Twitter users discuss the Fed about as much as other major federal regulatory agencies, that discussion is likely more negative (using the Twitter “ratio” as a loose proxy for negativity). And third, President Trump’s Twitter campaign against the Fed has been good for the President’s Twitter account and bad for the Federal Reserve. The President’s tweets amplify discussions about the Fed on Twitter. More importantly, President Trump’s Fed tweets generate a larger and more favorable response from Twitter users than do his other tweets.