The Euro Cash Changeover, Inflation Perceptions and the Media
KOF Working Paper No. 254
34 Pages Posted: 19 Feb 2010
Date Written: February 1, 2010
Abstract
In the aftermath of the euro cash changeover consumers’ inflation perceptions rose substantially in the euro area countries while actual inflation figures remained almost unchanged. During that period media reporting on the potentially large inflationary effect of the euro introduction intensified. In this paper we argue that the information set of the public has been distorted through the significant slant in the media. Employing an unique dataset for Germany, we provide evidence that media reporting has a statistically significant and economically meaningful impact on inflation perceptions and contributed to their sharp rise in the aftermath of the euro cash changeover.
Keywords: Monetary policy, inflation perceptions, media coverage, media bias
JEL Classification: E52, D83
Suggested Citation: Suggested Citation
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