This paper provides non-parametric tests of the correspondence between the 'words' on price stability from the ECB President's statement and future interest rate changes. It also indicates the commonality of the signal between these indicators of pressure on price stability.

The importance of truncated distributions for bias in estimation is demonstrated for a Japanese policy reaction function. Due to the proximity of a zero lower bound (ZLB) on interest rates, coefficient estimates can be biased upwards. This paper illustrates the importance of measuring and...