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Who Cares about Inflation? Empirical Evidence from the Czech Republic

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  • Michael Berlemann

    ()
    (Helmut-Schmidt-University Hamburg, Faculty of Economics & Social Sciences, Hamburg, Germany)

Abstract

Most central banks around the globe have the primary task to fight inflation. In the light of the fact that at least moderate inflation turns out to have little effect on the economy this is somewhat surprising. In order to understand why many countries have installed central banks which (almost exclusively) focus on fighting inflation it is necessary to understand why people care about inflation. However, comparatively little knowledge is yet available on the individual determinants of inflation aversion. Up to now, empirical (and quite inconclusive) evidence is available for a number of large Western democracies. Moreover, the evidence is mostly drawn from pure cross section data. Thus, it is yet unclear in how far the results depend on the prevailing macroeconomic situation and can be generalized. In this paper we study the individual determinants of inflation aversion in the Czech Republic. Using data from 11 waves of the Eurobarometer survey we find age, political orientation, education and the macroeconomic situation to have significant effects on the revealed preferences towards fighting inflation while income seems not to play a significant role.

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Bibliographic Info

Article provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its journal Czech Economic Review.

Volume (Year): 6 (2012)
Issue (Month): 3 (October)
Pages: 225-243

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Handle: RePEc:fau:aucocz:au2012_225

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Keywords: Inflation; inflation aversion; preferences;

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  1. Michael Berlemann, 2011. "ECB Presidency and Inflation Aversion among the Citizens of European Countries: An Empirical Assessment," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(2), pages 88-92, 07.
  2. Dyba, Karel & Svejnar, Jan, 1991. "Czechoslovakia: Recent Economic Developments and Prospects," American Economic Review, American Economic Association, vol. 81(2), pages 185-90, May.
  3. Robert J. Barro & David B. Gordon, 1984. "Rules, Discretion and Reputation in a Model of Monetary Policy," NBER Working Papers 1079, National Bureau of Economic Research, Inc.
  4. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
  5. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
  6. Jonung, Lars, 1981. "Perceived and Expected Rates of Inflation in Sweden," American Economic Review, American Economic Association, vol. 71(5), pages 961-68, December.
  7. Jayadev, Arjun, 2006. "Differing preferences between anti-inflation and anti-unemployment policy among the rich and the poor," Economics Letters, Elsevier, vol. 91(1), pages 67-71, April.
  8. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
  9. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
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