Working Paper: CEPR ID: DP14202
Authors: Dimitris Christelis; Dimitris Georgarakos; Tullio Jappelli; Maarten van Rooij
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.
Keywords: inflation expectations; inflation uncertainty; anchoring; trust in the ECB; subjective expectations
JEL Codes: D12; D81; E03; E40; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trust in the ECB (E58) | Inflation expectations (E31) |
| Trust in the ECB (E58) | Inflation expectations (10th and 20th percentiles) (E31) |
| Trust in the ECB (E58) | Inflation expectations (80th and 90th percentiles) (E31) |
| Trust in the ECB (E58) | Inflation uncertainty (E31) |