10.17169/FUDOCS_DOCUMENT_000000008221
Schmidt, Sandra
Nautz, Dieter
Central bank communication and the perception of monetary policy by financial market experts
Freie Universität Berlin
2010
Central bank communication; Interest rate forecasts; Survey expectations; Panel random coefficient model
337 Internationale Volkswirtschaft
337 International economics
ddc:337
339 Makroökonomie und verwandte Themen
339 Macroeconomics and related topics
ddc:339
Universitätsbibliothek der FU Berlin
Universitätsbibliothek der FU Berlin
Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
2018-04-10
2010
Buch
978-3-941240-41-4
http://dspace.ub.fu-berlin.de/handle/fub188/5579
10.17169/FUDOCS_document_000000008221
urn:nbn:de:kobv:188-fudocsdocument000000008221-5
25 S.
This paper investigates why financial market experts misperceive the interest rate policy of the European Central Bank (ECB). Assuming a Taylor-rule-type reaction function of the ECB, we use qualitative survey data on expectations about the future interest rate, inflation, and output to discover the sources of in- dividual interest rate forecast errors. Based on a panel random coefficient model, we show that financial experts have systematically misperceived the ECB's in- terest rate rule. However, although experts tend to overestimate the impact of inflation on future interest rates, perceptions of monetary policy have become more accurate since clarification of the ECB's monetary policy strategy in May 2003. We find that this improved communication has reduced disagreement over the ECB's response to expected inflation during the financial crisis.