Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203269
Authors: 
Bursian, Dirk
Faia, Ester
Year of Publication: 
2013
Series/Report no.: 
SAFE Working Paper No. 14
Abstract: 
Trust in policy makers .uctuates signi.cantly over the cycle and a¤ects the transmission mechanism. Despite this it is absent from the literature. We build a monetary model embedding trust cycles; the latter emerge as an equilibrium phenomenon of a game-theoretic interaction between atomistic agents and the monetary authority. Trust a¤ects agents.stochastic discount factors, namely the price of future risk, and through this it interacts with the monetary trans- mission mechanism. Using data from the Eurobarometer surveys we analyze the link between trust and the transmission mechanism of macro and monetary shocks: empirical results are in line with theoretical ones.
Subjects: 
trust evolutionary games
risk perception
monetary transmission mechanism
JEL: 
E0
E5
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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