TY  - UNPD
A1  - Bursian, Dirk
A1  - Faia, Ester
T1  - Trust in the monetary authority : [draft: july 2013]
T2  - SAFE working paper series ; No. 14
N2  - The efficacy of monetary authority actions depends primarily on the ability of the monetary authority to affect inflation expectations, which ultimately depend on agents' trust. We propose a model embedding trust cycles, as emerging from sequential coordination games between atomistic agents and the policy maker, in a monetary model. Trust affects agents' stochastic discount factor, namely the price of future risk, and their expectation formation process: these effects in turn interact with the monetary transmission mechanism. Using data from the Eurobarometer survey we analyze the link between trust on the one side and the transmission mechanism of shocks and of the policy rate on the other: data show that the two interact significantly and in a way comparable to the obtained in our model.
T3  - SAFE working paper - 14 
KW  - trust evolutionary games
KW  - trust driven expectations
KW  - monetary transmission mechanism
Y1  - 2013
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/29384
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-293848
UR  - http://ssrn.com/abstract=2245574
N1  - First draft: September 2012. This draft: July 2013.
IS  - draft: july 2013
PB  - Goethe-Univ., House of Finance, Sustainable Architecture for Finance in Europe, SAFE
CY  - Frankfurt am Main
ER  -