1 / 17

Determinants of Trust in the European Central Bank

Determinants of Trust in the European Central Bank. Justina AV Fischer TWI, University of Konstanz Volker Hahn ETH Zurich Workshop ‘The First Decade of the Monetary Union’ Muenster, 29 May – 30 May. Why does trust in the ECB matter ?. Monetary policy

xantha-cleveland
Télécharger la présentation

Determinants of Trust in the European Central Bank

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Determinants of Trust in the European Central Bank Justina AV Fischer TWI, University of Konstanz Volker Hahn ETH Zurich Workshop ‘The First Decade of the Monetary Union’ Muenster, 29 May – 30 May

  2. Why does trust in the ECB matter ? • Monetary policy • reputation (Kydland and Prescott, 1977; Barro and Gordon, 1983) • inflation expectations (New Keynesian models) • Trust as public support • Independence • Expansion of EMU

  3. Conjectures • Price stability as objective (Maastricht) => (changes in) inflation • Short-term/ lay men: economic performance • => national income (growth) • => unemployment rate • => labor market policies (signal) • => economic stabilizers (signal)

  4. Data • Eurobarometer surveys: National level of trust in the ECB (% answering “tend to trust”) • 12 countries, 1999 – 2004, start-up phase • GDP per capita • National inflation rate (general/specific goods) • Unemployment rate • Spending on unemployment benefits (% GDP) • Spending on active labor market policies (% GDP) • (WDI, EUROSTAT, OECD)

  5. Model + Method • Trustit = f(ECOit, population, country FE, time FE) + eit • FE GLS estimator • ECO lagged by one period

  6. National income

  7. Inflation and unemployment

  8. Inflation of non-durable goods

  9. Labor market policies

  10. Empirical conclusion • What matters to trust in the ECB • Inflation (-) • National Income (+) • Active labor market spending (-) • Unemployment spending (+) • What does not matter • Unemployment rate

  11. Robustness test: long-term GDP growth

  12. Robustness test: expectations on the economy

  13. Robustness: trust in other national and supranational institutions

  14. Robustness: Spillovers between institutions

  15. Robustness: knowledge about EU

  16. Policy implications • Inflation: ok • Start-up phase: greater sensitivity ? • Economic performance: dilemma. National policy affects trust in ECB. • Role of welfare state

More Related