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
Date Written: November 2007
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: Suggested Citation