"Loose lips sinking markets?" : The impact of political communication on sovereign bond spreads N°150, July 2013
In: 2013; (2013)
Online
Elektronische Ressource
Taking a cue from the assertion that “loose lips sink markets” (Carmassi and Micossi, 2010), this paper investigates to what extent and why political communication has had an impact on the sovereign bond spreads of selected euro area countries over the German Bund. Drawing on 25,000 news media releases between January 2009 and October 2011, it empirically compares political communication across various political actors at the supranational and national levels in the euro area. It fi nds empirical evidence that, in the short term, certain types of political communication have a quantifi able effect on sovereign bond spreads. This effect can be positive or negative depending on the type of communication, possibly fuelling self-reinforcing feedback loops between markets and policy actions. Subsequently, this paper explores possible reasons for this observed phenomenon. It analyses the specifi c economic, political and institutional context in which political communication works in Europe and fi nds that the potential for miscommunication is structurally higher in the euro area than in other nation-based currency areas. Finally, the paper identifi es avenues to make communication policy more effective and puts forward possible measures to mitigate the risks of miscommunication
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"Loose lips sinking markets?" : The impact of political communication on sovereign bond spreads N°150, July 2013
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Autor/in / Beteiligte Person: | European Central Bank ; Gade, Thomas ; Salines, Marion ; Glöckler, Gabriel |
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Quelle: | 2013; (2013) |
Veröffentlichung: | 2013 |
Medientyp: | Elektronische Ressource |
ISSN: | 1725-6534 (print) |
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