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Is ECB Communication Effective?

Author

Listed:
  • Carlo Rosa
  • Giovanni Verga

Abstract

In its Monthly Bulletin of November 2002, the European Central Bank (ECB) stated that the monthly press conference held by its President represents one of its most important communication channels and that it provides a comprehensive summary of the policy relevant assessment of economic developments. After providing a glossary to translate the qualitative information of the press conferences into an ordered scale, we verify empirically whether and to what extent market expectations react to the information released by the ECB. We found that the public not only understand but also believe the signals sent by the European monetary authority.

Suggested Citation

  • Carlo Rosa & Giovanni Verga, 2005. "Is ECB Communication Effective?," CEP Discussion Papers dp0682, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0682
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    File URL: https://cep.lse.ac.uk/pubs/download/dp0682.pdf
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    Cited by:

    1. Helge Berger & Jakob de Haan & Jan‐Egbert Sturm, 2011. "Does money matter in the ECB strategy? New evidence based on ECB communication," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 16(1), pages 16-31, January.
    2. Helge Berger & Michael Ehrmann & Marcel Fratzscher, 2011. "Monetary Policy in the Media," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(4), pages 689-709, June.
    3. Stefan Gerlach, 2007. "Interest Rate Setting by the ECB, 1999-2006: Words and Deeds," International Journal of Central Banking, International Journal of Central Banking, vol. 3(3), pages 1-46, September.
    4. Oscar Bernal Diaz & Jean-Yves Gnabo, 2007. "Talks, financial operations or both? Generalizing central banks' FX reaction functions," DULBEA Working Papers 07-03.RS, ULB -- Universite Libre de Bruxelles.
    5. Christian Bordes & Laurent Clerc, 2007. "Price Stability And The Ecb'S Monetary Policy Strategy," Journal of Economic Surveys, Wiley Blackwell, vol. 21(2), pages 268-326, April.
    6. Hamza Bennani, 2012. "National influences inside the ECB: an assessment from central bankers' statements," Working Papers hal-00992646, HAL.
    7. Bulíř Aleš & Čihák Martin & Šmídkova Kateřina Š, 2013. "Writing Clearly: The ECB’s Monetary Policy Communication," German Economic Review, De Gruyter, vol. 14(1), pages 50-72, February.
    8. Helge Berger & Jakob de Haan & Jan-Egbert Sturm, 2006. "Does money matter in the ECB strategy?," KOF Working papers 06-125, KOF Swiss Economic Institute, ETH Zurich.
    9. Mizen, Paul, 2009. "What can we learn from central bankers' words? Some nonparametric tests for the ECB," Economics Letters, Elsevier, vol. 103(1), pages 29-32, April.
    10. Pierre L. Siklos & Martin T. Bohl, 2008. "Policy words and policy deeds: the ECB and the euro," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 247-265.
    11. Ludovic Desmedt & Matthieu Llorca, 2016. "L’euro, le bourdon et le banquier central," Post-Print hal-01430375, HAL.
    12. David-Jan Jansen & Jakob De Haan, 2009. "Has ECB communication been helpful in predicting interest rate decisions? An evaluation of the early years of the Economic and Monetary Union," Applied Economics, Taylor & Francis Journals, vol. 41(16), pages 1995-2003.
    13. Ehrmann, Michael & Fratzscher, Marcel, 2007. "The timing of central bank communication," European Journal of Political Economy, Elsevier, vol. 23(1), pages 124-145, March.
    14. repec:rim:rimwps:35-07 is not listed on IDEAS
    15. Rosa, Carlo & Verga, Giovanni, 2007. "On the consistency and effectiveness of central bank communication: Evidence from the ECB," European Journal of Political Economy, Elsevier, vol. 23(1), pages 146-175, March.
    16. David-Jan Jansen & Jakob de Haan & Jakob de Haan, 2006. "Does ECB Communication Help in Predicting its Interest Rate Decisions?," CESifo Working Paper Series 1804, CESifo.
    17. Michael J. Lamla & Sarah M. Rupprecht, 2006. "The Impact of ECB Communication on Financial Market Expectations," KOF Working papers 06-135, KOF Swiss Economic Institute, ETH Zurich.
    18. David-Jan Jansen & Jakob de Haan, 2005. "Is a Word to the Wise Indeed Enough? ECB Statements and the Predictibility of Interest Rate Decisions," DNB Working Papers 075, Netherlands Central Bank, Research Department.
    19. Alicia Garcia-Herrero & Eric Girardin & Enestor Dos Santos, 2015. "Follow what I do and also what I say: monetary policy impact on Brazil’s financial markets," Working Papers 1512, BBVA Bank, Economic Research Department.
    20. Jansen, David-Jan & de Haan, Jakob, 2007. "Were verbal efforts to support the euro effective? A high-frequency analysis of ECB statements," European Journal of Political Economy, Elsevier, vol. 23(1), pages 245-259, March.
    21. Bernal, Oscar & Gnabo, Jean-Yves, 2009. "Announcements, financial operations or both? Generalizing central banks' FX reaction functions," Journal of the Japanese and International Economies, Elsevier, vol. 23(4), pages 367-394, December.
    22. Marie Musard‐Gies, 2006. "Do European Central Bank'S Statements Steer Interest Rates In The Euro Zone?," Manchester School, University of Manchester, vol. 74(s1), pages 116-139, September.
    23. Reeves, Rachel & Sawicki, Michael, 2007. "Do financial markets react to Bank of England communication?," European Journal of Political Economy, Elsevier, vol. 23(1), pages 207-227, March.

    More about this item

    Keywords

    communication; credibility; ECB; glossary; Repo; Euribor; news approach;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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