Abstract/Summary

This paper studies the determinants of the support for the European Central Bank (ECB) in the member-countries of the European Monetary Union (EMU) and their evolution from 1999 to 2015. Our contribution is to examine micro-level socio-demographic characteristics from the Eurobarometer surveys jointly with macroeconomic indicators of trust in a central bank in order to evaluate econometrically their relative importance over time. Pseudo-panel logit estimates reveal that the former have a dynamically stable, and generally stronger influence taken altogether, when compared with the latter. Interestingly, we find that while expected inflation becomes a positive determinant of trust in the ECB after the Global Financial Crisis (GFC), actual inflation gets no statistical significance. Having taken centre stage in the monetary policy debate in the Euro area post-GFC and especially since 2013, excessive disinflation and risk of deflation attracted strong attention by the public, and have consequently affected its perceptions about the ECB. Accordingly, our results emphasize forward-lookingness of the EMU population with regard to ‘deflation scares’ in determining trust in the ECB, in addition to disentangling the contributions of the key individual-level socio-demographic factors, and can duly inform ECB’s communication strategy.