Navigating the Well-Being Effects of Monetary Policy: Evidence from the Euro Area
IMF Working Papers, December 1, 2023
Source details
- Canonical URL
- Navigating the Well-Being Effects of Monetary Policy: Evidence from the Euro Area
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Bibliographic details
- Authors: Mehdi El Herradi, Aurélien Leroy
- Published: December 1, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400260674.001
Overview and context
- Central banks have recently adjusted their communication strategies to enhance engagement with the general public.
- There is limited understanding of public sentiment regarding monetary policy announcements.
- This paper investigates whether monetary policy announcements influence household (subjective) well-being in Germany over the period 2002-2018.
Key findings
- Tightening surprises reduce life satisfaction.
- The impact of a one standard deviation monetary policy shock on well-being is equivalent to a 4% decline in household income.
- The adverse well-being effect is particularly pronounced among:
- middle-aged individuals
- those belonging to the middle-class
Data and scope
- Country: Germany
- Period: 2002-2018
- Subject areas: Aging, Asset prices, Education, Health, Income, National accounts, Population and demographics, Prices
- Keywords: Aging; Asset prices; Euro Area; Global; IMF working paper 23/248; Income; Monetary policy; monetary policy announcement; monetary policy surprise; standard deviation monetary policy shock; Subjective Well-Being; Survey data; well-being effect
Content in this bundle
- Working Paper