Working Paper: CEPR ID: DP16525
Authors: Michael Ehrmann; Alena Wabitsch
Abstract: Central banks have intensified their communication with non-experts – an endeavour which some have argued is bound to fail. This paper studies English and German Twitter traffic about the ECB to understand whether its communication is received by non-experts and how it affects their views. It shows that Twitter traffic is responsive to ECB communication, also for non-experts. For several ECB communication events, Twitter constitutes primarily a channel to relay information: tweets become more factual and the views expressed more moderate and homogeneous. Other communication events, such as former President Draghi’s “Whatever it takes” statement, trigger persistent traffic and a divergence in views. Also, ECB-related tweets are more likely to get retweeted or liked if they express stronger or more subjective views. Thus, Twitter also serves as a platform for controversial discussions. The findings suggest that central banks manage to reach non-experts, i.e. their communication is not a road to nowhere.
Keywords: monetary policy; central bank communication; social media; nonexperts
JEL Codes: E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ECB communication events (E58) | Twitter activity (Z13) |
| Draghi's 'whatever it takes' statement (E52) | Twitter activity (Z13) |
| ECB communication events (E58) | divergence in views on Twitter (F62) |
| ECB communication (E58) | moderation of opinions among non-experts (D70) |
| Stronger or more subjective tweets (C92) | likelihood of being retweeted or liked (C52) |
| Discourse about ECB president vs institution (E58) | differentiation in sentiment (D91) |