The Clash of Monetary Civilizations

Communication is an important governance tool for monetary policy makers.While economic agents' short term decisions do tend to be guided by concretemonetary policy measures the more relevant long term expectationscan only be steered indirectly through communication. According to theneoclassical paradigm effective communication rests on two premises. Firstto be credible central banks have to match deeds to words (symmetry).Second the direction of communication is marked by strict linearity due tothe superior informational endowment of the sender central bank vis-à-visthe receiver public sector. The European Central Banks approach tocommunication reflects the neoclassical consensus. Designed on the drawingboard the supranational central banks communication strategy is reduced totechnocracy. On the national level though path dependent differences in theapproaches to communication continue to exist. By way of empiricalexample both the Bundesbank and the Banque de France have adjusted theircommunication strategies to their countries historic sociological andinstitutional particularities. In practice national central banks remainembedded in national informational networks. Neither symmetry nor linearityare vindicated.The book addresses monetary policy decision makers politicians in and socialscientists alike.