Forward Guidance and Credibility

Tanja Linta

No 24-1532, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper measures variation in central bank credibility through the level of agree-ment in a monetary policy committee and empirically studies its relevance for the effectiveness of forward guidance. In the European Central Bank’s (ECB) insti-tutional framework, high-frequency identification shows that non-unanimity within the Governing Council makes financial markets doubt the credibility of their com-mitment to forward guidance promises. Instead, they expect a change in policy direction, regardless of the ECB promising the opposite. Reduced credibility of the commitment then dampens the effect the easing bias in communication has on expectations while confirming unanimity does not seem to reinforce it.

Date: 2024-05
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.tse-fr.eu/sites/default/files/TSE/docu ... 2024/wp_tse_1532.pdf Full Text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:129332

Access Statistics for this paper

More papers in TSE Working Papers from Toulouse School of Economics (TSE) Contact information at EDIRC.
Bibliographic data for series maintained by ().