Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95883
Authors: 
Hayo, Bernd
Neuenkirch, Matthias
Year of Publication: 
2014
Series/Report no.: 
Joint Discussion Paper Series in Economics 04-2014
Abstract: 
In this paper, we study whether central bank communication has a positive effect on market participants' perception of central banks' (i) credibility, (ii) unorthodox measures, and (iii) independence. We utilise a survey of more than 500 financial market participants from around the world who answered questions in reference to the Bank of England (BoE), the Bank of Japan (BoJ), the European Central Bank (ECB), and the Federal Reserve (Fed). We find that market participants believe that the Fed communicates best, followed by the BoE, ECB, and BoJ. Similar rankings are found on the issues of credibility, satisfaction with unconventional monetary policy, and possible deterioration in independence. Using ordered probit models, we show that central bank communication has a positive effect on how central banks are perceived and understood, as it enhances credibility, increases satisfaction with unorthodox measures, and fosters perceived independence of central banks.
Subjects: 
Central Bank
Communication
Credibility
Financial Crisis
Financial Market Participants
Independence
Survey
Unconventional Monetary Policy
JEL: 
E52
E58
Document Type: 
Working Paper

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