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Trust in the Central Bank and Inflation Expectations

Dimitris Christelis (), Dimitris Georgarakos (), Tullio Jappelli () and Maarten van Rooij ()

No 14202, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using micro data from the 2015 Dutch CentERpanel, we examine whether trust in the European Central Bank (ECB) influences individuals' expectations and uncertainty about future inflation, and whether it anchors inflation expectations. We find that higher trust in the ECB lowers inflation expectations on average, and significantly reduces uncertainty about future inflation. Moreover, results from quantile regressions suggest that trusting the ECB increases (lowers) inflation expectations when the latter are below (above) the ECB's inflation target. These findings hold after controlling for people's knowledge about the objectives of the ECB.

Keywords: anchoring; Inflation expectations; Inflation uncertainty; subjective expectations; trust in the ECB (search for similar items in EconPapers)
JEL-codes: D12 D81 E03 (search for similar items in EconPapers)
Date: 2019-12
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Working Paper: Trust in the central bank and inflation expectation (2020) Downloads
Working Paper: Trust in the central bank and inflation expectations (2016) Downloads
Working Paper: Trust in the Central Bank and Inflation Expectations (2016) Downloads
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