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.
Trust in the Central Bank and inflation expectations / Christelis, Dimitris; Georgarakos, Dimitris; Jappelli, Tullio; van Roij, Marteen. - In: INTERNATIONAL JOURNAL OF CENTRAL BANKING. - ISSN 1815-4654. - 16:(2020), pp. 1-38.
Trust in the Central Bank and inflation expectations
Tullio JappelliPenultimo
;
2020
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.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.