Does central bank communication really lead to better forecasts of policy decisions?
Open access
Date
2009-08Type
- Working Paper
ETH Bibliography
yes
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Abstract
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 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. Show more
Permanent link
https://doi.org/10.3929/ethz-a-005888643Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
Europäische Zentralbank; ECB; Communication; Central bank; Taylor ruleOrganisational unit
03446 - Bernauer, Thomas / Bernauer, Thomas
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
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ETH Bibliography
yes
Altmetrics