Ferrara and De Roux pose the question with more tact, in their article (Capturing International Influences in US Monetary Policy Through an NLP Approach) presented to ISF meetings here in Charlottesville. They seek to see whether in the FOMC minutes, international economic issues are mentioned in a way that, when converted into an index, appears as statistically significant in a Taylor equation, and provides the answer “yes”.
First the “International Attention Index”:
Next, the regression of the federal funds rate on the lag, the nominal interest rate, the PCE gap and the output gap, augmented by the international attention index.
The index is normalized from 0 to 1, so that a 0.10 increase in the index results in an 80 basis point reduction in the federal funds rate from what it would otherwise be. For context, the increase in the index during the expansion of the Russian invasion of Ukraine was about 0.10.
From the summary:
Our results show that when the focus is on international topics within the FOMC,
Fed monetary policy generally tends to be more accommodative than predicted by a standard Taylor rule. This result is robust to various alternatives that include a time-varying neutral interest rate or a shadow central bank interest rate.