Climate change and central bank trust
Eickmeier and Petersen, in this paper examine how the European Central Bank’s climate-related activities influence public trust and inflation expectations in Germany. The authors utilized data from a June 2023 survey of over 4,000 German households (Bundesbank-Online-Panel-Households) where respondents were provided information about the ECB’s climate initiatives and asked about their trust in the ECB, concerns about climate change, and inflation expectations. They then conducted multivariate regression analyses to identify factors influencing changes in trust due to the ECB’s climate engagement and a difference-in-difference analysis to assess the impact of the information intervention on inflation expectations in subsequent survey waves.
Key findings:
- Public trust:
– 69% of respondents reported increased trust in the ECB due to its climate activities.
– The majority appreciated the ECB’s broader scope and concern beyond economic matters. - Concerns:
– 17% and 20% of respondents expressed concerns about potential compromises to price stability or independence, respectively.
– 23% believed that climate efforts would help the ECB better achieve its core objectives. - Inflation expectations:
– The study found minimal impact of the ECB’s climate engagement on household inflation expectations. - Factors influencing trust:
– Higher trust in the ECB was associated with women, those anticipating higher economic growth, and individuals more concerned about climate change.
– Prior knowledge of the ECB’s climate efforts did not significantly affect changes in trust. - Central bankers’ perceptions:
– Bundesbank staff generally provided realistic assessments of how climate activities affected households’ trust.
– However, they tended to overestimate the impact on inflation expectations.
The ECB’s climate activities and public trust
Authors: Sandra Eickmeier Luba Petersen
From: Deutsche Bundesbank, Simon Fraser University
