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Preferences over inflation and unemployment in Europe: a north–south divide?

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  • Malte Hübner
  • Marcus Klemm

Abstract

We use data on individual life satisfaction to estimate the costs associated with inflation and unemployment for 15 European countries, starting in the 1970s. This allows us to calculate country-specific inflation aversion relative to unemployment aversion. We find a considerable heterogeneity across European countries. There is no or only a small degree of relative inflation aversion for those countries that were characterized by above-average inflation rates in the decade preceding the current crisis in the euro area. Among the countries with a higher relative inflation aversion, the results correspond less clearly with historical inflation patterns. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Malte Hübner & Marcus Klemm, 2015. "Preferences over inflation and unemployment in Europe: a north–south divide?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 319-335, December.
    • Handle: RePEc:spr:inrvec:v:62:y:2015:i:4:p:319-335
    DOI: 10.1007/s12232-015-0235-y
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    More about this item

    Keywords

    Inflation aversion; Unemployment; Stability culture; Life satisfaction; E50; I31; Z13;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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