Navigating the Well-Being Effects of Monetary Policy: Evidence from the Euro Area
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Summary:
Central banks have recently adjusted their communication strategies to enhance engagement with the general public, yet 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 and finds that tightening surprises reduce life satisfaction. Notably, the impact of a one standard deviation monetary policy shock on well-being is equivalent to a 4% decline in household income. This effect is particularly pronounced among middle-aged individuals and those belonging to the middle-class.
Series:
Working Paper No. 2023/248
Subject:
Aging Asset prices Education Health Income National accounts Population and demographics Prices
Frequency:
regular
English
Publication Date:
December 1, 2023
ISBN/ISSN:
9798400260674/1018-5941
Stock No:
WPIEA2023248
Format:
Paper
Pages:
39
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