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Monetary policy in the media

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Author Info
Helge Berger () (Free University Berlin, Department of Economics, Boltzmannstr. 20, 14195 Berlin, Germany & CESifo.)
Michael Ehrmann () (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
Marcel Fratzscher () (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)

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Abstract

Media coverage of monetary policy actions is a central channel of a central bank’s communication with the wider public, and thus an important factor for its credibility and policy effectiveness. This paper analyses the coverage which ECB monetary policy decisions receive in the print media, and the determinants of its extent and of its favorableness. We find that that the press critically discusses the ECB’s policy decisions in the context of prior market expectations and of the inflation environment, and that the media’s coverage of decisions is generally highly responsive to ECB communication – in particular its Press Conference on meeting days. However, the paper also finds clear limitations in this regard, thus underlining the critical monitoring role assumed by the media. JEL Classification: E52, E58.

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Publisher Info
Paper provided by European Central Bank in its series Working Paper Series with number 679.

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Length: 53 pages
Date of creation: Sep 2006
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Handle: RePEc:ecb:ecbwps:20060679

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Postal: Press and Information Division, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany
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Related research
Keywords: Monetary policy; ECB; communication; media; press; coverage; transparency; accountability.;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Michael Ehrmann & Marcel Fratzscher, 2005. "How should central banks communicate?," Working Paper Series 557, European Central Bank. [Downloadable!]
  2. Tim Groseclose & Jeffrey Milyo, 2005. "A Measure of Media Bias," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1191-1237, November. [Downloadable!] (restricted)
    Other versions:
  3. Refet Gurkaynak & Brian Sack & Eric Swanson, 2005. "Do Actions Speak Louder than Words? The Response of Asset Prices to Monetary Policy Actions and Statements," Macroeconomics 0504013, EconWPA. [Downloadable!]
    Other versions:
  4. Claus Brand & Daniel Buncic & Jarkko Turunen, 2006. "The impact of ECB monetary policy decisions and communication on the yield curve," Working Paper Series 657, European Central Bank. [Downloadable!]
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  5. Ben S. Bernanke & Vincent R. Reinhart & Brian P. Sack, 2004. "Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(2004-2), pages 1-100. [Downloadable!]
    Other versions:
  6. Eijffinger, Sylvester C W & Hoeberichts, Marco & Schaling, Eric, 2000. "A Theory of Central Bank Accountability," CEPR Discussion Papers 2354, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Michael Woodford, 2005. "Central Bank Communication and Policy Effectiveness," NBER Working Papers 11898, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Willem H. Buiter, 1999. "Alice in Euroland," Journal of Common Market Studies, Blackwell Publishing, vol. 37(2), pages 181-209, 06. [Downloadable!] (restricted)
  9. Michael Ehrmann & Marcel Fratzscher, 2005. "Communication and decision-making by central bank committees - different strategies, same effectiveness?," Working Paper Series 488, European Central Bank. [Downloadable!]
  10. Alan S. Blinder, 1999. "Central Banking in Theory and Practice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522608.
  11. Heinemann, Friedrich & Ullrich, Katrin, 2005. "Does it Pay to Watch Central Bankers? Lips? The Information Content of ECB Wording," ZEW Discussion Papers 05-70, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  12. W.H. Buiter, 1999. "Alice in Euroland," CEP Discussion Papers dp0423, Centre for Economic Performance, LSE. [Downloadable!]
  13. Rachel Reeves & Michael Sawicki, 2005. "Do financial markets react to Bank of England communication?," Discussion Papers 15, Monetary Policy Committee Unit, Bank of England. [Downloadable!]
  14. Guillaume R. Frechette, 2001. "Random-effects ordered probit," Stata Technical Bulletin, StataCorp LP, vol. 10(59). [Downloadable!]
  15. David-Jan Jansen & Jakob de Haan, 2006. "Look who's talking: ECB communication during the first years of EMU," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 11(3), pages 219-228. [Downloadable!]
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  16. Michael Ehrmann & Marcel Fratzscher, 2005. "Transparency, disclosure and the Federal Reserve," Working Paper Series 457, European Central Bank. [Downloadable!]
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  17. Gerlach, Stefan, 2004. "Interest Rate Setting by the ECB: Words and Deeds," CEPR Discussion Papers 4775, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  18. Jakob Haan & Fabian Amtenbrink & Sandra Waller, 2004. "The Transparency and Credibility of the European Central Bank," Journal of Common Market Studies, Blackwell Publishing, vol. 42(4), pages 775-794, November. [Downloadable!] (restricted)
  19. Guthrie, Graeme & Wright, Julian, 2000. "Open mouth operations," Journal of Monetary Economics, Elsevier, vol. 46(2), pages 489-516, October. [Downloadable!] (restricted)
  20. Carlo Rosa & Giovanni Verga, 2005. "Is ECB Communication Effective?," CEP Discussion Papers dp0682, Centre for Economic Performance, LSE. [Downloadable!]
  21. Magnus Andersson & Lars Jul Hansen & Szabolcs Sebestyén, 2006. "Which news moves the euro area bond market?," Working Paper Series 631, European Central Bank. [Downloadable!]
  22. Veall, Michael R & Zimmermann, Klaus F, 1996. " Pseudo-R-[superscript 2] Measures for Some Common Limited Dependent Variable Models," Journal of Economic Surveys, Blackwell Publishing, vol. 10(3), pages 241-59, September.
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," NBER Working Papers 13932, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Michael Ehrmann & Marcel Fratzscher, 2007. "Explaining monetary policy in press conferences," Working Paper Series 767, European Central Bank. [Downloadable!]
    Other versions:
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