The importance of the wording of the ECB
By: Carlo Rosa and Giovanni Verga.
Contributors: Verga, Giovanni.; London School of Economics and Political Science. Centre for Economic Performance.
Series: CEP discussion paper ;; no. 694; Discussion paper (London School of Economics and Political Science. Centre for Economic Performance : Online) ;; no. 694.
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Published: 2005
Place of publication: London
Language: eng
Format: Electronic resource
Description: This paper analyses the ECB communication, focusing in particular on its transparency dimension. We posit that if the ECB is transparent about its future policy decisions, then we should be able to forecast fairly well its future interest rate setting behaviour. We find that the predicting ability of the European monetary authority's words, is similar to the one implied by market-based measures of monetary policy expectations. Moreover, the ECB's wording provides complementary, rather than substitute, information with respect to economic and monetary variables.
Notes: Includes bibliographical references.
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