Establishing Credibility: Evolving Perceptions of the European Central Bank

The credibility of a central bank’s anti-inflation stance, a key determinant of its success, may reflect institutional structure or, more dynamically, the history of policy decisions. The first years of the European Central Bank (ECB) provide a natural experiment for considering whether, and how, central bank credibility evolves. In this paper, we present a model demonstrating how the high-frequency response of asset prices to news reflects market perceptions of the anti-inflation stance of a central bank. Empirical tests of this model on high frequency data, regressing both the change in the slope of the German yield curve and the change in the euro/dollar exchange rate on the surprise component of price news, suggest significant instability in the market’s perception of the policy stance of the ECB during its first five years of operation. Estimated smoothed paths of the coefficients linking news to asset prices show that these coefficients change with policies undertaken by the ECB. In contrast, there is no evidence of parameter instability for the response of the slope of the United States yield curve to price news during this period, suggesting no comparable evolution in the market perceptions of the commitment to inflation fighting by the Federal Reserve.Central Banking, European Central Bank, Federal Reserve, inflation, exchange rate, credibility, yield curve

Establishing Credibility: Evolving Perceptions of the European Central Bank

The perceptions of a central bank’s inflation aversion may reflect institutional structure or, more dynamically, the history of its policy decisions. In this paper, we present a novel empirical framework that uses high frequency data to test for persistent variation in market perceptions of central bank inflation aversion. The first years of the European Central Bank (ECB) provide a natural experiment for this model. Tests of the effect of news announcements on the slope of yield curves in the euro-area, and on the euro/dollar exchange rate, suggest that the market’s perception of the policy stance of the ECB during its first six years of operation significantly evolved, with a belief in its inflation aversion increasing in the wake of its monetary tightening. In contrast, tests based on the response of the slope of the United States yield curve to news offer no comparable evidence of any change in market perceptions of the inflation aversion of the Federal Reserve.Central Banking, European Central Bank, Federal Reserve, inflation, exchange rate, monetary policy, credibility, yield curve

Establishing Credibility: Evolving Perceptions of the European Central Bank

The perceptions of a central bank's inflation aversion may reflect institutional structure or, more dynamically, the history of its policy decisions. In this paper, we present a novel empirical framework that uses high frequency data to test for persistent variation in market perceptions of central bank inflation aversion. The first years of the European Central Bank (ECB) provide a natural experiment for this model. Tests of the effect of news announcements on the slope of yield curves in the euro-area, and on the euro/dollar exchange rate, suggest that the market's perception of the policy stance of the ECB during its first six years of operation significantly evolved, with a belief in its inflation aversion increasing in the wake of its monetary tightening. In contrast, tests based on the response of the slope of the United States yield curve to news offer no comparable evidence of any change in market perceptions of the inflation aversion of the Federal Reserve.

Establishing credibility: Evolving perceptions of the European Central Bank

The perceptions of a central bank’s inflation aversion may reflect institutional structure or, more dynamically, the history of its policy decisions. In this paper, we present a novel empirical framework that uses high-frequency data to test for persistent variation in market perceptions of central bank inflation aversion. The first years of the European Central Bank (ECB) provide a natural experiment for this model. Tests of the effect of news announcements on the slope of yield curves in the euro area and on the euro-dollar exchange rate suggest that the market’s perception of the policy stance of the ECB evolved significantly during the first six years of the Bank’s operation, with a belief in its inflation aversion increasing in the wake of its monetary tightening. In contrast, tests based on the response of the slope of the U.S. yield curve to news offer no comparable evidence of any change in market perceptions of the inflation aversion of the Federal Reserve

Paroxysmal eye–head movements in Glut1 deficiency syndrome

Objective:To describe a characteristic paroxysmal eye–head movement disorder that occurs in infants with Glut1 deficiency syndrome (Glut1 DS).Methods:We retrospectively reviewed the medical charts of 101 patients with Glut1 DS to obtain clinical data about episodic abnormal eye movements and analyzed video recordings of 18 eye movement episodes from 10 patients.Results:A documented history of paroxysmal abnormal eye movements was found in 32/101 patients (32%), and a detailed description was available in 18 patients, presented here. Episodes started before age 6 months in 15/18 patients (83%), and preceded the onset of seizures in 10/16 patients (63%) who experienced both types of episodes. Eye movement episodes resolved, with or without treatment, by 6 years of age in 7/8 patients with documented long-term course. Episodes were brief (usually &lt;5 minutes). Video analysis revealed that the eye movements were rapid, multidirectional, and often accompanied by a head movement in the same direction. Eye movements were separated by clear intervals of fixation, usually ranging from 200 to 800 ms. The movements were consistent with eye–head gaze saccades. These movements can be distinguished from opsoclonus by the presence of a clear intermovement fixation interval and the association of a same-direction head movement.Conclusions:Paroxysmal eye–head movements, for which we suggest the term aberrant gaze saccades, are an early symptom of Glut1 DS in infancy. Recognition of the episodes will facilitate prompt diagnosis of this treatable neurodevelopmental disorder.</jats:sec