The Euro Cash Changeover, Inflation Perceptions and the Media

KOF Working Paper No. 254

34 Pages Posted: 19 Feb 2010

See all articles by Michael J. Lamla

Michael J. Lamla

ETH Zurich - KOF Swiss Economic Institute; University of Essex

Sarah M. Lein

Swiss National Bank; University of Basel; ETH Zürich - KOF Swiss Economic Institute

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

Lamla, Michael J. and Lamla, Michael J. and Lein, Sarah M. and Lein, Sarah M., The Euro Cash Changeover, Inflation Perceptions and the Media (February 1, 2010). KOF Working Paper No. 254, Available at SSRN: https://ssrn.com/abstract=1554337 or http://dx.doi.org/10.2139/ssrn.1554337

Michael J. Lamla (Contact Author)

ETH Zurich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Sarah M. Lein

Swiss National Bank ( email )

Research
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University of Basel ( email )

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ETH Zürich - KOF Swiss Economic Institute ( email )

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Switzerland