Coping with People's Inflation Perceptions During a Currency Changeover

University of Heidelberg Department of Economics Discussion Paper No. 458

25 Pages Posted: 23 Nov 2007

See all articles by Thomas A. Eife

Thomas A. Eife

Heidelberg University - Alfred Weber Institute for Economics

W. Timothy Coombs

Eastern Illinois University

Date Written: November 2007

Abstract

The discrepancy between popular impressions of how the 2002 changeover to the euro affected prices and its actual impact is perhaps the most surprising consequence of the single currency's introduction. Following the changeover, perceived inflation rose significantly and returned to its prechangeover level only several months later. This paper argues that people's inflation misperceptions could have been avoided. Using principles of crisis communication, we identify the mistakes made and present policy recommendations for future changeovers.

Keywords: euro changeover, perceived inflation, communication, perceptual crisis

JEL Classification: E50, E60, Y80

Suggested Citation

Eife, Thomas Albert and Coombs, W. Timothy, Coping with People's Inflation Perceptions During a Currency Changeover (November 2007). University of Heidelberg Department of Economics Discussion Paper No. 458, Available at SSRN: https://ssrn.com/abstract=1031846 or http://dx.doi.org/10.2139/ssrn.1031846

Thomas Albert Eife (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

W. Timothy Coombs

Eastern Illinois University ( email )

Charleston, IL 61920-3099
United States

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