Inflation Aversion in the European Union: Exploring the Myth of a North-South Divide

40 Pages Posted: 30 Oct 2015

See all articles by David Howarth

David Howarth

Universite du Luxembourg

Charlotte Rommerskirchen

University of Edinburgh - School of Social and Political Science

Date Written: October 28, 2015

Abstract

Our study seeks to prove that German Stability Culture is a myth. The concept is a core legitimizing element of economic policy discourse in Germany and used regularly to juxtapose Germany and northern Europe and the euro area periphery. Using Eurobarometer surveys we construct a measurement for Stability Culture which is based on the priority assigned to the fight against inflation. Our empirical analysis covers the 2002 to 2010 timespan and includes 27 European Union Member States. Our results show that the distinction between northern states with an allegedly strong and southern states with an allegedly weak Stability Culture is a myth. Controlling for actual inflation, we find that the northern Member States with an allegedly high Stability Culture are less concerned with price stability than the rest of the EU.

Keywords: Culture, Europe, Germany, socio-economics

JEL Classification: Z1

Suggested Citation

Howarth, David and Rommerskirchen, Charlotte, Inflation Aversion in the European Union: Exploring the Myth of a North-South Divide (October 28, 2015). Edinburgh School of Law Research Paper No. 2015/34. Available at SSRN: https://ssrn.com/abstract=2682588 or http://dx.doi.org/10.2139/ssrn.2682588

David Howarth (Contact Author)

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Charlotte Rommerskirchen

University of Edinburgh - School of Social and Political Science ( email )

Edinburgh, EH8 9LL
United Kingdom

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