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Perceived inflation and the euro: Evidence from an Austrian survey

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  • Stix, Helmut

Abstract

This paper employs an Austrian micro-dataset to analyze why inflation perceptions became disconnected from official inflation measures in the course of the euro cash changeover. We find evidence that persons who are more often confronted with prices, who expected price increases and who mentally convert euro prices into old currency prices when making price comparisons have a significantly higher perception of inflation. Furthermore, our results indicate that the latter two factors have a persistent impact. This contributes in explaining why price perceptions have not normalized for several years in some countries. The results suggest that policy measures in countries which are going to introduce the euro should address these issues in order to prevent a similar development as experienced in many euro area countries.

Suggested Citation

  • Stix, Helmut, 2009. "Perceived inflation and the euro: Evidence from an Austrian survey," European Journal of Political Economy, Elsevier, vol. 25(4), pages 547-561, December.
    • Handle: RePEc:eee:poleco:v:25:y:2009:i:4:p:547-561
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    Cited by:

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    2. Chadi, Adrian, 2015. "Concerns about the Euro and happiness in Germany during times of crisis," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 126-146.
    3. Michael J. Lamla & Sarah Lein, 2010. "The Euro Cash Changeover, Inflation Perceptions and the Media," KOF Working papers 10-254, KOF Swiss Economic Institute, ETH Zurich.
    4. Valentin Jouvanceau, 2021. "The Effect of the Euro Changeover on Prices: Evidence from Lithuania," Bank of Lithuania Working Paper Series 93, Bank of Lithuania.

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