Dimitris Georgarakos (Deutsche Bundesbank) - Trust in Central Bank and Economic Expectations

Date(s): Thursday 19th November 2015 (14:00-15:00)
Description: This week's speaker will be Dimitris Georgarakos from the Deutsche Bundesbank. His main research is: Household Finance, Consumer Behaviour, Microeconometrics and Applied Microeconomics.

Title: Trust in Central Bank and Economic Expectations

Authors:
Dimitris Christelis (University of Naples)
Dimitris Georgarakos (Deutsche Bundesbank)
Tullio Jappelli (University of Naples)
Maarten van Rooij (De Nederlandsche Bank)

Abstract: Does trust in the Central Bank contribute to people’s economic expectations? Using micro data from the Dutch CentERdata Internet panel we examine whether trust in the ECB associates with respondents’ expectations and uncertainty about various future economic outcomes. We find that individuals who trust more the ECB expect on average a lower inflation and are less uncertain about price developments, while, in addition, they anticipate a higher economic growth as well as an increase in house and stock market prices. These effects are to a large extent independent from people’s knowledge about the objectives of the ECB. Our findings highlight people’s expectations as a channel through which Central Bank commitment to accountability can influence the economy.

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