DP15735 Who Talks During Monetary Policy Quiet Periods, and Why? Evidence from the European Central Bank's Governing Council

Author(s): Phillipp Gnan, Kilian Rieder
Publication Date: January 2021
Date Revised: May 2021
Keyword(s): career concerns, central bank communication, Central bank transparency, decision-making, European Central Bank, Home Bias, leaks, monetary policy, quiet period, rotational voting
JEL(s): D82, D83, E52, E58, E61, G12
Programme Areas: Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15735

We provide the first systematic analysis of individual monetary policy-makers' incentives to communicate during quiet periods in the run-up to policy meetings. Drawing on ECB proprietary sources, we construct a novel statement-level data set documenting the evolution of quiet period communication by ECB Governing Council members between 2008 and 2020. We find that members' policy-making experience and expertise are robustly associated with breaches of quiet period rules. Our results also suggest that (anticipated) policy changes can amplify the role of career and expertise effects during the quiet period. Moreover, we review the ECB-internal classification of statements into breaches and non-breaches. We argue that this classification is prone to loopholes and appears to under-report non-compliance by ECB Executive Board members before 2014. Finally, we exploit plausibly exogenous variation in the ECB rotational voting schedule to show that non-voting members do not engage in strategic communication during the quiet period to lock in their voting peers.