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Trust in the European Union project and the role of ECB

Giorgio Liotti () and Rosaria Rita Canale ()
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Giorgio Liotti: University of Naples “Federico II”

Economia Politica: Journal of Analytical and Institutional Economics, 2021, vol. 38, issue 2, No 3, 482 pages

Abstract: Abstract Was the European Central Bank able to assure the relaunch of the European project after the weakening of the post-crisis period? To answer this question, this paper presents an empirical analysis connecting citizen trust in the European Union with a variable intended to be a measure of the monetary policy strategy of the European Central Bank, namely, the interest rate on government bonds extracted from the 1-year maturity yield curve. The dynamic panel technique, applied to nineteen Eurozone countries for the time span of 2004–2018, estimates the presence of a long-run common relationship between the variables despite allowing different short-run adjustment mechanisms. Results are revealed to be not univocal: the easy monetary policy strategy is associated for the whole period with a decline of trust, and therefore, despite its impressiveness, it was not sufficient to relaunch the European Union project. However, when considering the change in strategy of the post-2013 period, it seemed to have contributed to a slight inversion of the decline of trust. These results highlight the importance of non-conventional measures and call for further support from coordinated policy action as a response to the negative shock deriving from the COVID-19 pandemic.

Keywords: Trust; European Union; Monetary policy; Systemic shock; Dynamic panel data (search for similar items in EconPapers)
JEL-codes: C33 E02 E58 E63 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s40888-021-00229-5

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