Schweizerische Nationalbank · SIX:SNBN
Schweizerische Nationalbank — Swiss National Bank — Technical Presentation (May 2011)
13 slides from Schweizerische Nationalbank's technical presentation, May 15, 2011
Slide 1: Trust no more? The impact of the crisis on citizens' trust in central banks
Trust no more? The impact of the crisis on citizens’ trust in central banks Sébastien Wälti Swiss National Bank NBP-SNB Joint Seminar The views expressed in this paper are those of the author and do not necessarily represent those of the Swiss National Bank.
Slide 2: Motivation
Motivation I Survey results show that citizens’ trust in economic institutions, including central banks, has generally declined since the onset of the crisis. I A Financial Times/Harris Poll was conducted in the United Kingdom, France, Italy, Spain, Germany and the United States in June 2009. People
Slide 3: Motivation
Motivation .5 .4 .3 .2 .1 .0 2000 2002 2004 2006 2008
Slide 4: Motivation
Motivation I What are the determinants of net trust in the ECB, in particular since the onset of the crisis? I Is the decline in trust related to movements in inflation and unemployment since the beginning of the crisis? I Is this decline also related to other country-specific developments during th
Slide 5: Econometric specification
Econometric specification I Eurobarometer surveys are conducted twice a year. The dependent variable is net trust in country i at survey t. Trusti,t = αi + λt + βπi,t + γUi,t + δXi,t + εi,t where πi,t measures deviations of inflation from some optimal level in country i at survey t, Ui,t stands for
Slide 6: Data
Data I Eurobarometer surveys consist of approximately 1000 interviews for each EU member state at each survey. I Question: And, for each of them, please tell me if you tend to trust it or tend not to trust it? The list of institutions includes the European Central Bank. I Net trust = share of respon
Slide 7: Explanatory variables
Explanatory variables Survey t − 1 Survey t - Information set for Fieldwork t
Slide 8: Explanatory variables
Explanatory variables I Suppose that net trust depends only on inflation and unemployment: Trusti,t = α + βπi,t + γUi,t + εi,t I For example, the variable πi,t is really the average inflation rate in country i between the month before the fieldwork t and the first month of the previous fieldwork t −
Slide 9: Results: without survey effects
Results: without survey effects (I) (II) (III) (IV) (V) (VI) (VII) (VIII) Inflation −1.669∗∗ −1.638∗∗ −1.590∗ −1.647∗∗ −1.928∗∗ −1.416∗ −1.384∗ −1.453∗ (0.733) (0.763) (0.869) (0.837) (0.830) (0.774) (0.769) (0.803) Unemployment −1.184∗∗∗ −1.209∗∗∗ −1.198∗∗∗ −1.187∗∗∗ −1.110∗∗∗ −1.067∗∗ −1.049∗∗ −0.8
Slide 10: Results: with survey effects
Results: with survey effects (I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) Inflation −0.785 −0.891 −0.717 −0.845 −0.771 −0.771 −0.785 −0.926 −0.826 −0.944 (0.845) (0.754) (0.858) (0.857) (0.844) (0.851) (0.849) (0.953) (0.764) (0.765) Unemployment −0.107 0.264 −0.132 −0.053 −0.063 −0.123 −0.110
Slide 11: Year-on-year inflation
Year-on-year inflation 6 5 4 3 2 1 0 -1 -2 -3 99 00 01 02 03 04 05 06 07 08 09
Slide 12: Long-term sovereign bond yields
Long-term sovereign bond yields 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 PT NL IT IR GR FR FN ES BD BG OE
Slide 13: Concluding remarks
Concluding remarks I This paper studies the determinants of citizens’ trust in the ECB, in particular during the crisis. I Higher unemployment and inflation deviations from the social optimum, two typical arguments in social loss functions in macroeconomics, reduce net trust. I But country-specific
Swiss National Bank — Technical Presentation (May 2011) on 6ix