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Explaining EU citizens’ trust in the ECB in normal and crisis times

  • Ehrmann, Michael
  • Soudan, Michel
  • Stracca, Livio

We study the determinants of trust in the ECB as measured by the European Commission's Eurobarometer survey. The formulation of the corresponding question in this survey is very general, and compatible with very different notions of "trust" by respondents. In particular, the survey does not ask whether respondents trust that the ECB delivers on its mandate. Still, the ECB started with a relatively high level of trust right from the outset, especially in comparison with national institutions (other than central banks). However, with the onset of the global financial crisis, trust started to fall. It also continued to fall after 2010, a period not covered by our analysis. We find that the fall in trust until spring 2010 can be rather well explained based on the pre-crisis determinants, and show that it reflected the macroeconomic deterioration, a more generalised fall in the trust in European institutions in the wake of the crisis as well as the severity of the banking sector's problems, with which the ECB was associated in the public opinion. Finally, we show that a higher degree of knowledge about the ECB generates more trust in normal times and even more so during the financial crisis. JEL Classification: E58, G21, Z13

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Paper provided by European Central Bank in its series Working Paper Series with number 1501.

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Date of creation: Dec 2012
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Handle: RePEc:ecb:ecbwps:20121501
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  1. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," NBER Working Papers 13932, National Bureau of Economic Research, Inc.
  2. Justina Fischer & Volker Hahn, 2008. "Determinants of Trust in the European Central Bank," TWI Research Paper Series 26, Thurgauer Wirtschaftsinstitut, Universit�t Konstanz.
  3. Carin van der Cruijsen & David-Jan Jansen & Jakob de Haan, 2010. "How much does the public know about the ECB's monetary policy? Evidence from a survey of Duch households," DNB Working Papers 252, Netherlands Central Bank, Research Department.
  4. Betsey Stevenson & Justin Wolfers, 2011. "Trust in Public Institutions over the Business Cycle," CAMA Working Papers 2011-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  5. Robert Mosch & Henriëtte Prast, 2008. "Confidence and trust: empirical investigations for the Netherlands and the financial sector," DNB Occasional Studies 602, Netherlands Central Bank, Research Department.
  6. Christopher D. Carroll, 2003. "Macroeconomic Expectations of Households and Professional Forecasters," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 269-298.
  7. David G. Blanchflower & Conall MacCoille, 2009. "The formation of inflation expectations: an empirical analysis for the UK," NBER Working Papers 15388, National Bureau of Economic Research, Inc.
  8. van der Cruijsen, Carin A.B. & Eijffinger, Sylvester C.W., 2010. "From actual to perceived transparency: The case of the European Central Bank," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 388-399, June.
  9. Ehrmann, Michael & Fratzscher, Marcel, 2010. "Politics and Monetary Policy," CEPR Discussion Papers 8143, C.E.P.R. Discussion Papers.
  10. repec:pri:cepsud:161blinder is not listed on IDEAS
  11. Carin van der Cruijsen & Maria Demertzis, 2009. "How Anchored Are Inflation Expectations in EMU Countries?," DNB Working Papers 235, Netherlands Central Bank, Research Department.
  12. J. Easaw & R. Golinelli & M. Malgarini, 2012. "Do Households Anchor their Inflation Expectations? Theory and Evidence from a Household Survey," Working Papers wp842, Dipartimento Scienze Economiche, Universita' di Bologna.
  13. Bernd Hayo, 2005. "Mass Attidudes Toward Financial Crisis and Economic Reform in Korea," Marburg Working Papers on Economics 200504, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  14. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
  15. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
  16. Karl Kaltenthaler & Christopher J. Anderson & William J. Miller, 2010. "Accountability and Independent Central Banks: Europeans and Distrust of the European Central Bank," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 1261-1281, November.
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