On the consistency and effectiveness of central bank communication: Evidence from the ECB

Rosa, Carlo; Verga, Giovanni

doi:10.1016/j.ejpoleco.2006.09.016

Cited by 151 publications

(128 citation statements)

References 22 publications

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“…Two conclusions can be drawn from our estimations. First, in line with the results of Heinemann and Ullrich (2007) and Rosa and Verga (2007), the coefficients of the ECB communication indicators are significantly different from zero, although in some cases only at the 10% level, except for the KOF MPC. However, according to the KOF MPC, the ECB already starts preparing the general public for interest rate changes more than 1 meeting in advance.…”

Section: Estimation Resultssupporting

confidence: 80%

“…In our analysis we include five indicators that are all based on the introductory statement by the ECB President, namely an updated version of the index of Rosa and Verga (2007), 8 the aggregate index of Berger et al (2010), the index of Heinemann and Ullrich (2007), the KOF Monetary Policy Communicator (MPC) as published by the KOF Swiss Economic Institute and used by Conrad and Lamla (2007), 9 and the indicator of Ullrich (2008). 10 All data used in the present paper are available.…”

Section: Datamentioning

confidence: 99%

“…2 For instance, Gorter et al (2008) report that in their backward-looking Taylor model the Taylor principle does not hold, in contrast to the Taylor model with expected inflation and output growth. So the findings of Heinemann and Ullrich (2007) and Rosa and Verga (2007) may just reflect their use of a potentially mis-specified Taylor rule model. Jansen and De Haan (2009) employed a similar forward-looking Taylor rule model as used in the present paper and conclude that their communication indicator does not increase the fit of the model.…”

Section: Introductionmentioning

confidence: 99%

“…3 Second, all previous papers use just one indicator of ECB communication. Whereas Heinemann and Ullrich (2007) and Rosa and Verga (2007) use communication indicators that are based on the introductory statement of the ECB's President at the press conference following the ECB policy meeting, Jansen and De Haan (2009) employ an indicator based on Bloomberg news reports. We will show that even if various communication indicators are based on the same information, i.e.…”

Section: Introductionmentioning

confidence: 99%

“…In order to test to what extent results are sensitive to the choice of a particular indicator, we employ five different indicators of ECB communication that are all based on the ECB President's introductory statement at the press conference following an ECB policy meeting. Apart from the indicators of Heinemann and Ullrich (2007) and an updated version of the index of Rosa and Verga (2007), we employ the aggregate…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Does central bank communication really lead to better forecasts of policy decisions? New evidence based on a Taylor rule model for the ECB

2010

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Nowadays, it is widely believed that greater disclosure and clarity over policy may lead to greater predictability of central bank actions. We examine whether communication by the European Central Bank (ECB) adds information compared to the information provided by a Taylor rule model in which real-time expected inflation and output growth are used. We use five indicators of ECB communication that are all based on the ECB President's introductory statement at the press conference following an ECB policy meeting. Our results suggest that even though the indicators are sometimes quite different from one another, they add information that helps predict the next policy decision of the ECB. Furthermore, also when the interbank rate is included in our Taylor rule model, the ECB communication indicators remain significant.

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Section: Estimation Resultssupporting

confidence: 80%

Section: Datamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Does central bank communication really lead to better forecasts of policy decisions? New evidence based on a Taylor rule model for the ECB

2010

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ECB Projections as a Tool for Understanding Policy Decisions

Hubert

2015

Journal of Forecasting

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The European Central Bank publishes inflation projections quarterly and we aim to establish empirically whether they influence private inflation forecasts and whether they may be considered as an enhanced means of implementing policy decisions by facilitating private agents' information processing. We provide original evidence that ECB inflation projections do influence private inflation expectations positively, and that ECB projections convey signals about future ECB rate movements. This paper suggests that ECB projections enable private agents to correctly interpret and predict policy decisions.

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Does money matter in the ECB strategy? New evidence based on ECB communication

2010

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We examine the role of money in the policies of the ECB, using introductory statements of the ECB President at the monthly press conferences during 1999-2004. Over time, the relative amount of words devoted to the monetary analysis has decreased. Our analysis of indicators of the monetary policy stance suggests that developments in the monetary sector, while somewhat more important in the later half of the sample, only played a minor role most of the time. Our estimates of ECB interest rate decisions suggest that the ECB's words (monetarysector based policy intensions) are not an important determinant of its actions.JEL Code: E58, E52, E43.

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On the consistency and effectiveness of central bank communication: Evidence from the ECB

Cited by 151 publications

References 22 publications

Does central bank communication really lead to better forecasts of policy decisions? New evidence based on a Taylor rule model for the ECB

Does central bank communication really lead to better forecasts of policy decisions? New evidence based on a Taylor rule model for the ECB

ECB Projections as a Tool for Understanding Policy Decisions

Does money matter in the ECB strategy? New evidence based on ECB communication

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