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ECB Council Members’ Objectives and Public Debt at Home – Evidence from an AI-Based Textual Analysis

Author

Listed:
  • Friedrich Heinemann
  • Jan Kemper

Abstract

We examine the changing attention that ECB Governing Council members pay to different policy objectives by analysing more than 4,600 speeches given between the establishment of the ECB and the summer of 2024. Alongside the primary objective of price stability, we consider the following potential secondary objectives: financial stability, stability of the government bond market, sustainable public debt, climate protection and distribution. On the methodological side, we take advantage of LLMs to identify the speeches’ coverage of each of these objectives and the associated support. We conduct a series of validation tests to verify our AI-based scores, including a conventional dictionary approach. We use two-way fixed effects regressions to search for a link between a country's level of public debt and the objective function of its representatives. The results suggest that objectives have become more diverse in recent years. An increase in the public debt-to-GDP ratio in a governor’s home country is associated with a shift in focus away from the primary objective and towards a growing coverage and support for secondary objectives. This general pattern is particularly robust for the distribution objective. These results can only be partly explained by governor selection. Therefore, in their communication, individual governors indicate shifts in their objective function in response to changes in the fiscal situation of their home country.

Suggested Citation

  • Friedrich Heinemann & Jan Kemper, 2026. "ECB Council Members’ Objectives and Public Debt at Home – Evidence from an AI-Based Textual Analysis," CESifo Working Paper Series 12493, CESifo.
    • Handle: RePEc:ces:ceswps:_12493
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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