Trust in the central bank and inflation expectations

Christelis, D. , Georgarakos, D., Jappelli, T. and van Rooij, M. (2020) Trust in the central bank and inflation expectations. International Journal of Central Banking, 16(6), pp. 1-37.

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.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Georgarakos, Professor Dimitris and Christelis, Professor Dimitris
• Authors: Christelis, D., Georgarakos, D., Jappelli, T., and van Rooij, M.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: International Journal of Central Banking
• Publisher: Federal Reserve Board
• ISSN: 1815-4654
• ISSN (Online): 1815-7556
• Copyright Holders: Copyright © 2020 Association of the International Journal of Central Banking
• First Published: First published in International Journal of Central Banking 16(6): 1-37
• Publisher Policy: Reproduced in accordance with the publisher copyright policy