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Has ECB communication been helpful in predicting interest rate decisions? An evaluation of the early years of the Economic and Monetary Union
[journal article]
Abstract We examine the usefulness of communication by the European Central Bank for predicting its policy decisions during the early years of the European Economic and Monetary Union. Using ordered probit models based on the Taylor rule, we find that statements on the main refinancing rate and future inflat... view more
We examine the usefulness of communication by the European Central Bank for predicting its policy decisions during the early years of the European Economic and Monetary Union. Using ordered probit models based on the Taylor rule, we find that statements on the main refinancing rate and future inflation are significantly related to interest rate decisions. At the same time, an out-of-sample evaluation shows that communication-based models do not outperform models based on macroeconomic data in predicting decisions. Both types of models have difficulty in predicting changes in the main refinancing rate. (author's abstrac)... view less
Keywords
EU; European Central Bank; public relations work; communication; monetary policy
Classification
European Politics
Economic Policy
Document language
English
Publication Year
2009
Page/Pages
p. 1995-2003
Journal
Applied Economics, 41 (2009) 16
DOI
https://doi.org/10.1080/00036840802167384
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)