Memories of high inflation

Ehrmann, Michael; Tzamourani, Panagiota

doi:10.1016/j.ejpoleco.2011.11.005

Cited by 79 publications

(48 citation statements)

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“…A natural question is therefore whether extreme events such as stock market crashes influence attitudes and behaviors in a more persistent manner than less-extreme experiences. Related evidence supporting this hypothesis is provided by Ehrmann and Tzamourani (2012), who show that the effect of experienced inflation on inflation aversion typically fades away, whereas memories of hyperinflation tend to stay in people's minds and affect attitudes in a much more persistent manner.…”

Section: Any Difference For Extreme Events?mentioning

confidence: 77%

“…Having experienced higher inflation, for instance, tends to lower happiness (Blanchflower 2007), increase inflation expectations (Lombardelli and Saleheen 2003;Malmendier and Nagel 2009) and inflation aversion (Ehrmann and Tzamourani 2012). Having grown up during recessionary times matters for preferences: as Alesina and Giuliano (2011) and Giuliano and Spilimbergo (2009) demonstrate, such individuals are more likely to believe that success in life depends more on luck than on effort, and therefore have a more favorable attitude toward redistributional policies.…”

Section: Introductionmentioning

confidence: 99%

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Macroeconomic experiences and risk taking of euro area households

Ampudia

Ehrmann

2017

European Economic Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may MacroeconoMic exPerienceS and riSk Taking of euro area houSeholdS Miguel Ampudia and Michael EhrmannIn 2014 all ECB publications feature a motif taken from the €20 banknote.noTe: This Working Paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. The HFCN collects household-level data on households' finances and consumption in the euro area through a harmonised survey. The HFCN aims at studying in depth the micro-level structural information on euro area households' assets and liabilities. The objectives of the network are:1) understanding economic behaviour of individual households, developments in aggregate variables and the interactions between the two;2) evaluating the impact of shocks, policies and institutional changes on household portfolios and other variables;3) understanding the implications of heterogeneity for aggregate variables; 4) estimating choices of different households and their reaction to economic shocks; 5) building and calibrating realistic economic models incorporating heterogeneous agents; 6) gaining insights into issues such as monetary policy transmission and financial stability.The refereeing process of this paper has been co-ordinated by a team composed of Gabriel Fagan (ECB), Pirmin Fessler (Oesterreichische Nationalbank), Michalis Haliassos (Goethe University Frankfurt) , Tullio Jappelli (University of Naples Federico II), Sébastien PérezDuarte (ECB), Jiri Slacalek (ECB), Federica Teppa (De Nederlandsche Bank), Peter Tufano (Oxford University) and Philip Vermeulen (ECB).The paper is released in order to make the results of HFCN research generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the author's own and do not necessarily reflect those of the ESCB. AcknowledgementsThis paper uses data from the Eurosystem Household Finance and Consumption Survey. It presents the authors' personal opinions and does not necessarily reflect the views of the European Central Bank, the Eurosystem Household Finance and Consumption Network or the Bank of Canada. We are grateful to Ulrike Malmendier and Stefan Nagel for making their econometric code available, Tetti Tzamourani for help with some data, and thank Dimitris Christelis, Carlos García de Andoain, Dimitris Georgarakos, Nathan...

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Section: Any Difference For Extreme Events?mentioning

confidence: 77%

Section: Introductionmentioning

confidence: 99%

Macroeconomic experiences and risk taking of euro area households

Ampudia

Ehrmann

2017

European Economic Review

Self Cite

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“…One way to solve this puzzle may be to take into account that both Bolivia and Armenia have experienced hyperinflation in the last 30 years. Ehrmann and Tzamourani (2012) show that inflation memory in countries that experience high inflations fades after about 10 years. But for those countries that experience hyperinflation, the memory stays for a much longer period.…”

Section: Resultsmentioning

confidence: 99%

Testing the UIP Hypothesis-Using Data from Partially Dollarized Developing Countries

Mengistu

2014

IJEF

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Unlike studies relying on data from industrial countries, recent studies using data from partially dollarized developing countries have found a favorable result to the uncovered interest parity hypothesis (UIP). In this paper, we test the robustness of these results using data from partially dollarized countries with higher and more volatile inflation rate (Tanzania and Uganda) than the countries covered in previous literature on developing countries. We find that UIP does not hold in Uganda and Tanzania. In fact, unlike previous studies on developing countries, we find that the currency with the higher interest rate appreciates, i.e., there is a forward premium puzzle. We also find that the coefficients will be less biased if we use international dollar interest rates rather than domestic ones. This tells us that capital controls do not play much of a role in these countries. In addition, we test whether the higher liquidity of the currencies of trading partners will improve results in favor of UIP. The results do not provide a clear conclusion. We find less bias when using the Kenyan shilling and more bias when using the South African rand compared to the U.S. dollar.

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“…vii First, the variable 'inflation aversion', which is indicated by the percentage of respondents naming the fight against inflation as one of the two most important priorities, is taken as a proxy for the ideational grounding of the stability paradigm in the broader population. viii Similar approaches to measuring inflation aversion, -which use survey questions specifically about inflation without making explicit reference to other economic policy objectives which might be in conflict with achieving inflationcan be found in Ehrmann andTzamourani (2009), Hayo (1998), and Farvaque and Mihailov (2009)…”

Section: Quantifying the Europeanization Of Fiscal Policymentioning

confidence: 99%

An empirical investigation into the Europeanization of fiscal policy

LeMay-Boucher

Rommerskirchen

2014

Comp Eur Polit

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We investigate the Europeanisation of fiscal policy in the eurozone. So doing we empirically test the impact of a series of pertinent variables on eurozone Member States' fiscal policies during the 1984-2006 period. In addition to a host of usual-suspects, we introduce two new measurements to capture a country's Stability Culture -the effect of which has been not been addressed by previous empirical work. We find evidence that government debt is primarily driven by the state of the domestic economy. Virtually no empirical support for the claim that institutional, political or ideational factors influence the variations in gross debt can be provided. Specifically, our results show that neither a population's inflation aversion nor policy-makers' pledge to 'sound' public finances translate into lower deficits.

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Memories of high inflation

Cited by 79 publications

References 24 publications

Macroeconomic experiences and risk taking of euro area households

Macroeconomic experiences and risk taking of euro area households

Testing the UIP Hypothesis-Using Data from Partially Dollarized Developing Countries

An empirical investigation into the Europeanization of fiscal policy

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