Inflation Developments and Perceptions after the Euro Cash Changeover

Michael Ehrmann

German Economic Review, 2011, vol. 12, issue 1, 33-58

Abstract: This paper analyses the evolution of inflation and of consumers’ inflation perceptions in the aftermath of the euro cash changeover. It finds that the cross-country variation of food product inflation was dependent on the complexity of conversion rates, with statistically significant and economically sizeable effects especially for low-priced items sold in mid-priced stores. The paper also shows that cross-country differences in the mismatch of perceived and actual inflation were linked to differences in the complexity of conversion rates. These results are in line with theories of finite information-processing capacities on the side of consumers.

Keywords: Inflation; perceived inflation; euro cash changeover (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1111/j.1468-0475.2010.00503.x

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