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Coping with People’s Inflation Perceptions During a Currency Changeover

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Author Info
Thomas A. Eife () (University of Heidelberg, Department of Economics)
W. Timothy Coombs () (University of Illinois)

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Abstract

The gap between actual and perceived inflation is one of the more unexpected consequences of the euro changeover in January 2002. In this note we argue that this gap was caused by a lack of preparation and experience of the authorities to appropriately communicate with the public during the changeover. Using principles of crisis communication we identify the mistakes made and give policy recommendations for future changeovers.

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Publisher Info
Paper provided by University of Heidelberg, Department of Economics in its series Working Papers with number 0435.

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Length: 13 pages
Date of creation: Dec 2006
Date of revision: Dec 2006
Handle: RePEc:awi:wpaper:0435

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Related research
Keywords: crisis communication; transformative explanation; perceived inflation; euro changeover;

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Find related papers by JEL classification:
E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
Y80 - Miscellaneous Categories - - Related Disciplines - - - Related Disciplines

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Christoph Wunder & Johannes Schwarze & Gerhard Krug & Bodo Herzog, 2006. "Welfare Effects of the Euro Cash Changeover," Discussion Papers of DIW Berlin 646, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  2. Thomas A. Eife, 2006. "Price setting behaviour and price setting regulations at the euro changeover," Bank of Estonia Working Papers 2006-06, Bank of Estonia, revised 12 Oct 2006. [Downloadable!]
  3. Bettina Isengard & Thorsten Schneider, 2006. "The euro and its perception in the German population," Discussion Papers 011, University of Flensburg, International Institute of Management. [Downloadable!]
  4. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March. [Downloadable!] (restricted)
  5. Hans Wolfgang Brachinger, 2006. "Euro or “Teuro”?: The Euro-induced Perceived Inflation in Germany," DQE Working Papers 5, Department of Quantitative Economics, University of Freiburg/Fribourg Switzerland. [Downloadable!]
  6. Michael Ehrmann, 2006. "Rational inattention, inflation developments and perceptions after the euro cash changeover," Working Paper Series 588, European Central Bank. [Downloadable!]
  7. Thomas A. Eife & Stephan Meier, 2007. "Costly Inflation Misperceptions," Working Papers 0455, University of Heidelberg, Department of Economics, revised Oct 2007. [Downloadable!]
  8. Luc Aucremanne & Marianne Collin & Thomas Stragier, 2007. "Assessing the Gap between Observed and Perceived Inflation in the Euro Area : Is the Credibility of the HICP at Stake ?," Research series 200704-24, National Bank of Belgium. [Downloadable!]
  9. Giovanni Mastrobuoni & Wioletta Dziuda, 2005. "The Euro Changeover and its Effects on Price Transparency and Inflation," Carlo Alberto Notebooks 26, Collegio Carlo Alberto, revised 2006. [Downloadable!]
    Other versions:
  10. Manfred Fluch & Helmut Stix, 2005. "Perceived Inflation in Austria — Extent, Explanations, Effects," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 22-47, November. [Downloadable!]
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  1. Thomas A. Eife & Stephan Meier, 2007. "Costly Inflation Misperceptions," Working Papers 0455, University of Heidelberg, Department of Economics, revised Oct 2007. [Downloadable!]
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