Bernd Hayo, Professor at the University of Marburg provides an in-depth and compelling look at central banks and monetary policy through the eyes of the population
The author briefly discusses research addressing three aspects of a layperson’s knowledge and attitude towards monetary policy issues: Inflation perceptions and expectations, knowledge about monetary policy and trust in central banks.
On the inflation perceptions and expectations point, we find out that changing prices is a phenomenon that most consumers have faced more than once. In this vein, one research finding is that two-thirds of the population state that they do not monitor the inflation rate. The author stresses that a laypersons’ knowledge concerning inflation fits in with the imperfect information view that prevails in social psychology, rather than the rational actor view that is often assumed in the field of economics.
On the knowledge about monetary policy point, Hayo says that the University of Marburg’s survey results from Germany suggest there is a fundamental desire for people to be informed about monetary policy, something that is vitally important to both information search and knowledge. Interestingly, we discover that on the whole, men are more interested in monetary issues than women.
When it comes to central bank trust, the author explains that recently, the author provides some useful insights: “Increasing attempts by politicians in many countries to undermine the independence of their central bank. In light of that situation, arguably, support for a central bank by the public can help maintain its independence.”
The author concludes that through the eyes of the population, their view about monetary policy is an under-researched field of economics. I hope you enjoy reading the many valuable insights offered here.