Central Bank Communication as Public Opinion? Experimental Evidence
(with Dominik Duell and Will Lowe)
A single supranational organization, the European Central Bank (ECB), has a particularly challenging job as it must communicate complex policy information to over 300 million citizens living across 19 member states in the Eurozone. Embedding a vignette experiment into two waves of a panel survey of German households, we examine ways in which communications by the ECB affect individuals' information uptake as well as their inflation expectations. We also test whether approval (or not) of the ECB's policies, news media consumption, and an individual's policy congruence affect how panelists respond to central bank communications. Our main empirical findings suggest that short and clear snippets of ECB information are most effective in shaping respondents' inflation expectations. We also find that respondents more skeptical of the ECB are less likely to incorporate ECB information and that policy congruence with the ECB's target has little to no effect.