Trust in the central bank and inflation expectations
Dimitris Christelis (),
Dimitris Georgarakos (),
Tullio Jappelli () and
Maarten van Rooij ()
DNB Working Papers from Netherlands Central Bank, Research Department
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 also 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. In addition, higher trust in the ECB raises expectations about GDP growth. The findings suggest that a central bank can influence the economy through people's expectations, even in times when conventional monetary policy tools likely have weak effects.
Keywords: inflation expectations; inflation uncertainty; Anchorin; Trust in the ECB; Subjective Expectations (search for similar items in EconPapers)
JEL-codes: D12 D81 E03 E40 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Working Paper: Trust in the Central Bank and Inflation Expectations (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:537
Access Statistics for this paper
More papers in DNB Working Papers from Netherlands Central Bank, Research Department Contact information at EDIRC.
Series data maintained by Rob Vet ().