2021, Volume 74 - Issue 2
RSS feed citation: At RePEc
Publication date: 24 May 2021
ECONOMIC RESTRUCTURING AND SOCIALIST CONSTRUCTION IN CHINA: 1950-1978Read the article
SOVEREIGN DEBT AND ECONOMIC GROWTH NEXUS IN ZIMBABWE: A DYNAMIC MULTIVARIATE CAUSALITY TESTRead the article
A PANEL SVAR ANALYSIS OF THE LONG-RUN ECONOMIC IMPACTS OF MIGRATIONRead the article
Matti VIREN, Monetary Policy and Research Department, Bank of Finland and School of Economics, University of Turku, Finland
Sami OINONEN, Monetary Policy and Research Department, Bank of Finland
In this paper, we examine how professional forecasters’ expectations and expectation uncertainty have reacted to the ECB’s interest rate and non-conventional monetary policy decisions during the period 1999-2017. The analysis makes use of a conventional intervention dummy -type set up. The results indicate that expectations have been sensitive to policy actions, but forecasters’ reactions are quite different and, as a rule, do not seem to follow the predictions of a standard New Keynesian model. Also the relationship between inflation and output forecasts does not seem to follow a Phillips curve relationship. Rather, the forecasters interpret policy actions as signals of ECB’s inside information. Thus, for instance, cuts in policy rates are interpreted as the CB’s information of worse than generally assumed cyclical situation rather than the eventual positive effects of lower interest rates. The magnitude of expectation effects depends much of the way in which other macro variables are controlled. Even so the basic feature of these effects remain the same.
Expectations, ECB, Uncertainty, Monetary Policy
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