Who supported the Deutsche Bundesbank? An empirical investigation

The relevance of public support for monetary policy has largely been over-looked in the empirical Central Bank literature. We have constructed a new indicator for the support of the German Bundesbank and present descriptive and empirical evidence. We find that major German interest groups were quite heterogeneous in judging a given policy stance. Empirically, we show that (a) public support can (at least partly) offset pressure from other organized groups and (b) accounting for popular support of the Central Bank allows to make more accurate forecasts of the short-term interest rate.

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