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Media Coverage and ECB Policy-Making: Evidence from a New Index

Author

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  • Hamza Bennani

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

Using a novel index measuring media's uncertainty regarding the effectiveness of European Central Bank's (ECB) policy actions, this paper estimates the interest rate policy of the ECB with respect to media coverage of its monetary policy decisions. Our results suggest that the monetary institution implements a restrictive (accommodative) monetary policy, through its repo rate, in response to an increase (decrease) of the uncertainty expressed by the media concerning the effectiveness of its past policy actions, in particular since the global financial crisis. These results are robust when considering an alternative proxy of central bank's perceived effectiveness and ECB's unconventional policy measures in the estimation procedure. Our findings thus shed some light on the decision-making procedure of the ECB when the latter has to deal with the uncertain impact of its policy decisions as expressed by media coverage, and thus, address a critical issue related to the political economy of central banking.

Suggested Citation

  • Hamza Bennani, 2016. "Media Coverage and ECB Policy-Making: Evidence from a New Index," Working Papers hal-04141572, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141572
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141572
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    References listed on IDEAS

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