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How much does the public know about the ECB's monetary policy? Evidence from a survey of Dutch households

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  • van der Cruijsen, Carin
  • Jansen, David-Jan
  • de Haan, Jakob

Abstract

Does the general public know what central banks do? Is this kind of knowledge relevant? Using a survey of Dutch households, we investigate these questions for the case of the European Central Bank (ECB). Our findings suggest that knowledge on the ECB’s objectives is far from perfect. Both a weak desire to be informed and unawareness of insufficient knowledge are barriers for improving the public's understanding of monetary policy. However, our results also show that more intensive use of information improves understanding, suggesting that the media channel may play an important and constructive role in building knowledge. Finally, we find that knowledge on monetary policy objectives contributes to an individual's ability to form realistic inflation expectations. JEL Classification: D12, D84, E52, E58

Suggested Citation

  • van der Cruijsen, Carin & Jansen, David-Jan & de Haan, Jakob, 2010. "How much does the public know about the ECB's monetary policy? Evidence from a survey of Dutch households," Working Paper Series 1265, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20101265
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    References listed on IDEAS

    as
    1. David-Jan Jansen & Robert Mosch & Carin Cruijsen, 2015. "When Does the General Public Lose Trust in Banks?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 48(2), pages 127-141, October.
    2. N. Gregory Mankiw & Ricardo Reis, 2002. "Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1295-1328.
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    6. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    7. 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.
    8. Magee, L. & Robb, A. L. & Burbidge, J. B., 1998. "On the use of sampling weights when estimating regression models with survey data," Journal of Econometrics, Elsevier, vol. 84(2), pages 251-271, June.
    9. Neuenkirch, Matthias, 2012. "Managing financial market expectations: The role of central bank transparency and central bank communication," European Journal of Political Economy, Elsevier, vol. 28(1), pages 1-13.
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    1. Warto inwestować w wiedzę o polityce pieniężnej
      by kbien in Obserwator Finansowy on 2015-09-07 06:00:09

    Citations

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    Cited by:

    1. Bernd Hayo & Florian Neumeier, 2018. "Households’ Inflation Perceptions and Expectations: Survey Evidence from New Zealand," MAGKS Papers on Economics 201805, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Hayo, Bernd & Neuenkirch, Edith, 2014. "The German public and its trust in the ECB: The role of knowledge and information search," Journal of International Money and Finance, Elsevier, vol. 47(C), pages 286-303.
    3. repec:taf:rripxx:v:23:y:2016:i:6:p:1064-1092 is not listed on IDEAS
    4. Jansen, David-Jan, 2011. "Mumbling with great incoherence: Was it really so difficult to understand Alan Greenspan?," Economics Letters, Elsevier, vol. 113(1), pages 70-72, October.
    5. Siklos, Pierre L., 2017. "Central Banks into the Breach: From Triumph to Crisis and the Road Ahead," OUP Catalogue, Oxford University Press, number 9780190228835.
    6. Łyziak, Tomasz & Paloviita, Maritta, 2017. "Anchoring of inflation expectations in the euro area: Recent evidence based on survey data," European Journal of Political Economy, Elsevier, vol. 46(C), pages 52-73.
    7. Daniel Levy & Avichai Snir, 2017. "Potterian Economics," Working Papers 002-17 JEL Codes: A13, A1, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    8. Ehrmann, Michael & Stracca, Livio & Soudan, Michel, 2012. "Explaining EU citizens’ trust in the ECB in normal and crisis times," Working Paper Series 1501, European Central Bank.
    9. Méon, Pierre-Guillaume & Minne, Geoffrey, 2014. "Mark my words: Information and the fear of declaring an exchange rate regime," Journal of Development Economics, Elsevier, vol. 107(C), pages 244-261.
    10. repec:aut:wpaper:201906 is not listed on IDEAS
    11. Pierre-Guillaume Méon & Geoffrey Minne, 2014. "Mark my Words: Information and the Fear of Declaring one’s Exchange Rate Regime," Post-Print CEB, ULB -- Universite Libre de Bruxelles, vol. 107, pages 244-261, March.
    12. Bernd Hayo & Florian Neumeier, 2017. "Explaining Central Bank Trust in an Inflation Targeting Country: The Case of the Reserve Bank of New Zealand," ifo Working Paper Series 236, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    13. Timo Henckel & Shaun Vahey & Liz Wakerly, 2011. "Probabilistic Interest Rate Setting With A Shadow Board: A Description Of The Pilot Project," CAMA Working Papers 2011-27, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    14. Bernd Hayo & Florian Neumeier, 2018. "Central Bank Independence in New Zealand: Public Knowledge About and Attitude Towards the Policy Target Agreement," ifo Working Paper Series 266, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    15. Hayat, Muhammad Azmat & Farvaque, Etienne, 2012. "Public attitudes towards central bank independence: Lessons from the foundation of the ECB," European Journal of Political Economy, Elsevier, vol. 28(4), pages 512-523.
    16. Federica Teppa & Corrie Vis, 2012. "The CentERpanel and the DNB Household Survey: Methodological Aspects," DNB Occasional Studies 1004, Netherlands Central Bank, Research Department.
    17. Petra Geraats, 2014. "Monetary Policy Transparency," CESifo Working Paper Series 4611, CESifo Group Munich.
    18. Jakob de Haan & Marco Hoeberichts & Renske Maas & Federica Teppa, 2016. "Inflation in the euro area and why it matters," DNB Occasional Studies 1403, Netherlands Central Bank, Research Department.
    19. Mellina, Sathya & Schmidt, Tobias, 2018. "The role of central bank knowledge and trust for the public's inflation expectations," Discussion Papers 32/2018, Deutsche Bundesbank.

    More about this item

    Keywords

    ECB; financial literacy; inflation expectations; knowledge; monetary policy; transparency;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • 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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