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The Bundesbank's Communications Strategy and Policy Conflicts with the Federal Government

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  • Pierre L. Siklos

    ()
    (Department of Economics, Wilfrid Laurier University)

  • Martin T. Bohl

    ()
    (Department of Economics, European University Viadrina Frankfurt)

Abstract

In this paper we provide an estimate of the likelihood of conflict between the federal government and the Bundesbank for the 1989–1998 period. We rely on a novel proxy for the impact of public communication by Bundesbank officials on the probability of conflict, in addition to interest rate, exchange rate, money supply behavior, as well as electoral influences. The empirical evidence is consistent with the view that speeches by the Bundesbank president dealing with inflation and economic policy are a positive source of conflict in a probabilistic sense. Conflict was not a constant but flared up at times of economic stress and could be exacerbated by the “talking” of Bundesbank officials.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 72 (2005)
Issue (Month): 2 (October)
Pages: 395–409

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Handle: RePEc:sej:ancoec:v:72:2:y:2005:p:395-409

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  1. Frey, Bruno S. & Schneider, Friedrich, 1981. "Central bank behavior : A positive empirical analysis," Journal of Monetary Economics, Elsevier, vol. 7(3), pages 291-315.
  2. Siklos,Pierre L., 2002. "The Changing Face of Central Banking," Cambridge Books, Cambridge University Press, number 9780521780254, October.
  3. Garfinkel, Michelle R. & Oh, Seonghwan, 1995. "When and how much to talk credibility and flexibility in monetary policy with private information," Journal of Monetary Economics, Elsevier, vol. 35(2), pages 341-357, April.
  4. Vaubel, Roland, 1997. "The bureaucratic and partisan behavior of independent central banks: German and international evidence," European Journal of Political Economy, Elsevier, vol. 13(2), pages 201-224, May.
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  7. Siklos, Pierre L. & Skoczylas, Leslaw F., 2002. "Volatility clustering in real interest rates: international evidence," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 193-209, June.
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  15. Berger, Helge & de Haan, Jakob, 1999. "A State within the State? An Event Study on the Bundesbank (1948-1973)," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(1), pages 17-39, February.
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