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Navigating the well-being effects of monetary policy:Evidence from the European Central Bank

Author

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  • El Mehdi El Herradi

    (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Aurelien Leroy

    (UB - Université de Bordeaux, BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper assesses whether monetary policy announcements have an impact on households' (subjective) well-being by analysing life satisfaction on the days before and after monetary surprises in Germany. To do so, we use individual-level information on life satisfaction from the German Socio-Economic Panel (SOEP) survey and identify the day on which each answer is submitted to the survey. We also exploit the Euro Area Monetary Policy event study Database (EA-MPD) to obtain daily-level information on European Central Bank (ECB) monetary surprises. Our results show that life satisfaction is significantly affected by monetary policy surprises: tightening surprises decrease life satisfaction, while easing surprises increase it.

Suggested Citation

  • El Mehdi El Herradi & Aurelien Leroy, 2022. "Navigating the well-being effects of monetary policy:Evidence from the European Central Bank," Working Papers hal-03897994, HAL.
    • Handle: RePEc:hal:wpaper:hal-03897994
    Note: View the original document on HAL open archive server: https://hal.science/hal-03897994
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    More about this item

    Keywords

    Monetary policy; Subjective Well-Being; Survey data; European Central Bank;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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