Determinants of Trust in the European Central Bank
AbstractIn this paper we study the determinants of citizens’ trust in the European Central Bank during the start-up phase from 1999-2004. Using a country panel based on the Eurobarometer survey, we find that higher inflation rates reduce trust. Thus people appear to evaluate the performance of the ECB on the basis of its success in achieving its primary objective, namely price stability. However, national income also has a strong impact, which poses a dilemma to the ECB, as it cannot increase economic growth in the long run. Unemployment does not have a significant impact on trust in the ECB, while unemployment spending exerts a trust-building impact. Possibly, automatic stabilizers serve as substitutes for ECB interventions, which would lower people’s trust. Interestingly, active labor market policies, which can be interpreted as proxies for the public’s perception of the urgency of the problem of high unemployment, tend to decrease trust.
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Bibliographic InfoPaper provided by Thurgauer Wirtschaftsinstitut, Universität Konstanz in its series TWI Research Paper Series with number 26.
Date of creation: 2008
Date of revision:
ECB; trust; European Union; Eurobarometer; panel data; behavioral economics;
Other versions of this item:
- Fischer, Justina AV & Hahn, Volker, 2008. "Determinants of Trust in the European Central Bank," Working Paper Series in Economics and Finance 695, Stockholm School of Economics.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-20 (All new papers)
- NEP-CBA-2008-07-20 (Central Banking)
- NEP-EEC-2008-07-20 (European Economics)
- NEP-SOC-2008-07-20 (Social Norms & Social Capital)
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