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Forecasting ECB Monetary Policy: Accuracy is (Still) a Matter of Geography
Author:
Michael Ehrmannnull

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Marcel Fratzschernull

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Mr. Helge Berger
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Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 041
Language:
English
Publication Date:
01 Feb 2006
DOI:
https://doi.org/10.5089/9781451863017.001
ISBN:
9781451863017
ISSN:
1018-5941
Pages:
42
Keywords:
WP; policy rate; interest rate; central bank; consumer confidence; ECB monetary policy decision; monetary policy; ECB; forecast; geography; history; heterogeneity; Taylor rule; learning; transmission; survey data; communication; ECB behavior; ECB policy decision; ECB headquarters; ECB policy rate; systematic error; ECB communication; expected ECB policy rate; ECB policy change; ECB decision-making; ECB activity; Central bank policy rate; Central bank autonomy; Inflation; Industrial production; Unemployment
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Monetary policy in the euro area is conducted within a multicountry, multicultural, and multilingual context involving multiple central banking traditions. How does this heterogeneity affect the ability of economic agents to understand and to anticipate monetary policy by the European Central Bank (ECB)? Using a database of surveys of professional ECB policy forecasters in 24 countries, we find remarkable differences in forecast accuracy, and show that they are partly related to geography and clustering around informational hubs, as well as to country-specific economic conditions and traditions of independent central banking in the past. In large part, this heterogeneity can be traced to differences in forecasting models. While some systematic differences between analysts have been transitional and are indicative of learning, others are more persistent.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2006: Issue 041