Signalling Good Governance

Central Banks send policy signals and these signals shape household and market behaviour. Good signals—signals that are clear and reliable—set household and market expectations, yielding a lower inflation risk and price-level stability. While this is a common understanding of how monetary policy works, less known are the effects of fiscal signalling. Can governments signal their future spending plans to households and markets? Do these signals matter? This project empirically evaluates fiscal signalling strategies across a sample of European countries as well as offering more in depth analyses of Germany and Israel. It contributes to an understanding of how political institutions condition fiscal policy signalling and how, when, and why fiscal signalling matters for good governance.

Due to the leave of the project director, the project was continued at the University of Essex.