To study the role of trust in central banks for the effectiveness of monetary-policy communication, we plan to run a randomized control trial on customers of a large German bank. The selection of bank customers is as follows: we invite all bank customers with observable (categorized) consumption as well as all bank customers without observable consumption but who have outstanding debt at the bank to participate in the survey experiment. Customers with observable consumption and debt products from the participating bank are assigned to another research survey experiment, which we run at the same time. All other customers are randomly assigned to this survey experiment or the one we conduct in parallel.
Participating bank customers first answer questions on their beliefs about inflation; their trust in individuals and institutions, including the ECB; and their perception of benefiting from recent monetary policy. In the next stage, we randomly divide the sample into two groups. Both groups receive information about the ECB, but one group receives information about the ECB that is positive (such as, that inflation in Germany since the ECB is responsible for monetary policy has been lower on average than with the Bundesbank), while the other group receives negative information (such as that the ECB has been slow to act on the currently high rate of inflation). We present these information based on actual quotes from German newspapers or a research institute, and randomly vary whether respondents can immediately see the respective information sources. Following the first treatment stage, we re-elicit ECB trust and ask about the ECB’s inflation target.
Next, we include a second information intervention. We randomly assign two thirds of survey participants to a short statement by Christine Lagarde on the ECB’s commitment to bring inflation back to its 2% target. In the post-treatment stage, we ask about consumption and savings plans, as well as the credibility of various news sources. Respondents also state their macroeconomic expectations and answer questions about their background. Apart from an examination of the role of central-bank trust for macroeconomic expectations, bank data allow us to estimate treatment effects on actual consumption and financial choices.
We hypothesize that the first treatment induces exogenous variation in beliefs about the ECB’s commitment and ability to tame inflation. High (exogenous) trust in the ECB should increase the effectiveness of Lagarde’s statement in the second stage, leading to lower inflation expectations, higher interest-rate expectations, and possible effects on consumption-savings decisions.