The (Home) Bias of European Central Bankers: New Evidence Based on Speeches

Hamza Bennani and Matthias Neuenkirch

No 2014-16, Research Papers in Economics from University of Trier, Department of Economics

Abstract: Speeches are an important vehicle for central bankers to convey individual views on the preferred policy stance. In this paper, we employ an automated text linguistic approach to create an indicator that measures the tone of the 1,618 speeches delivered by members of the Governing Council (GC) during the period 1999M1-2014M4. We then relate this variable to euro-area and national macroeconomic forecasts. Our key findings are as follows. First, inflation and growth expectations have a positive and significant impact on the hawkishness of a speech. Second, the voiced preferences of national central bankers largely coincide with the level of independence their banks had at the time of the Maastricht Treaty. Third, country-specific macroeconomic conditions matter for speeches delivered inside the central banker's home country but not for those made abroad. Fourth, differences in central banker preferences are the key source of variation in their speeches before the financial crisis, whereas divergent national economic conditions are the main factor in the second part of the sample.

Keywords: Central Bank Communication; European Central Bank; Governing Council; Monetary Policy; National Interests; Speeches (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2014
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: The (home) bias of European central bankers: new evidence based on speeches (2017)
Working Paper: The (Home) Bias of European Central Bankers: New Evidence Based on Speeches (2017)
Working Paper: The (Home) Bias of European Central Bankers: New Evidence Based on Speeches * (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:trr:wpaper:201416

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