Memories of High Inflation
By Michael Ehrmann, Panagiota Tzamourani. Social Science Research Network, 2012
111 citations recorded by the source corpus.
Inflation has been well contained over the last decades in most industrialized countries. This implies, however, that memories of high inflation are likely to fade, because over time larger parts of the population have never experienced high inflation, whereas those who have might forget. This paper tests whether memories of high inflation affect agents’ preferences about the importance attached to price stability, using a large database covering over 52,000 survey responses from 23 countries over the years 1981-2000. It finds that memories of hyperinflation are there to last, whereas those of less drastic inflation experiences tend to erode after around 10 to 15 years. The recent decline in the importance attached to price stability does therefore most likely reflect mitigated inflation concerns in an environment of low and stable inflation, but also the consequences of fading memories of high inflation. The longer central banks have successfully delivered price stability, the more important it is for them to engage in a proactive communication, especially with the younger generations, about the merits of low and stable inflation. JEL Classification: D10, E31, E52
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/d447c402da9cbebb694a40e73468bce196fc25bb
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Citations in the corpus
- Speaking to the people? Money, trust, and central bank legitimacy in the age of quantitative easing (2016, background): “In a world in which public aversion to inflation varies considerably across countries (Ehrmann and Tzamourani, 2012; Scheve, 2004), postwar Germany stands out for its particularly strong anti-inflationary attitude, or ‘stability culture’ (Hayo and Neumeier, 2016; Tognato, 2012: 41–72).11 Here, the…”
- Learning from Inflation Experiences (2016, background): “Shiller (1997) and Ehrmann and Tzamourani (2009) examine the relation between cross-country variation in inflation histories and the public’s attitudes towards inflation-fighting policies.”