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Explaining EU citizens’ trust in the ECB in normal and crisis times

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Abstract

We study the determinants of trust in the ECB as measured by the European Commission's Eurobarometer survey. The formulation of the corresponding question in this survey is very general, and compatible with very different notions of "trust" by respondents. In particular, the survey does not ask whether respondents trust that the ECB delivers on its mandate. Still, the ECB started with a relatively high level of trust right from the outset, especially in comparison with national institutions (other than central banks). However, with the onset of the global financial crisis, trust started to fall. It also continued to fall after 2010, a period not covered by our analysis. We find that the fall in trust until spring 2010 can be rather well explained based on the pre-crisis determinants, and show that it reflected the macroeconomic deterioration, a more generalised fall in the trust in European institutions in the wake of the crisis as well as the severity of the banking sector's problems, with which the ECB was associated in the public opinion. Finally, we show that a higher degree of knowledge about the ECB generates more trust in normal times and even more so during the financial crisis. JEL Classification: E58, G21, Z13

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1501.

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Length: 31 pages
Date of creation: Dec 2012
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Handle: RePEc:ecb:ecbwps:20121501

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Keywords: Trust; Eurobarometer; global financial crisis; public opinion; European Central Bank;

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  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.
  2. Ehrmann, Michael & Fratzscher, Marcel, 2010. "Politics and Monetary Policy," CEPR Discussion Papers 8143, C.E.P.R. Discussion Papers.
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  8. Carin van der Cruijsen & David-Jan Jansen & Jakob de Haan, 2010. "How much does the public know about the ECB's monetary policy? Evidence from a survey of Duch households," DNB Working Papers 252, Netherlands Central Bank, Research Department.
  9. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
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  12. J. Easaw & R. Golinelli & M. Malgarini, 2012. "Do Households Anchor their Inflation Expectations? Theory and Evidence from a Household Survey," Working Papers wp842, Dipartimento Scienze Economiche, Universita' di Bologna.
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