The thesis focuses on theoretical and empirical analysis of the deterioration of price perception among European consumers after the introduction of the euro banknotes and coins. The aim of the thesis is to find out the major factors which provoked a rapid increase of the indicator of perceived inflation after 2002, while inflation in euro zone continued developing moderately, and to derive some conclusions for economic policy of candidate countries to euro introduction. There are at least four reasons why it matters to analyse the distortion of the indicator of perceived inflation from the HICP index which measures the inflation in the euro zone. Firstly, from the political and economical perspective there is a risk of weak support for the European monetary integration. Secondly, the distortion of price perception can deteriorate the belief in the official statistics. Thirdly, the inaccurate price perception can lead to wrong consumer decisions having an impact on a volume or a structure of national consumption. Last but not least, there is a risk of a negative impact on price expectations. In order to meet its goals, the thesis stases several hypotheses which analyse the problem from two perspectives. Firstly, from a mere review of detailed prices in the period of the introduction of the euro banknotes and coins (Hypotheses: (i) the consumers are more sensitive towards some price movements, therefore the deterioration of the indicator of perceived inflation can be explained by the abnormal evolution of some prices in the critical period of the euro introduction, (ii) convergence of the new euro prices towards round prices lead to frequent price movements having an impact on price perception) Secondly, from the point of view of limited perception of prices by consumers (Hypothesis: (iii) consumers does not behave rationally when deciding about prices therefore they are not able to perceive all price movements). The thesis is organized in three chapters. The first chapter is mainly theoretical and introduces the problem of perceived inflation. It is followed by two chapters which combine empirical and theoretical analysis of the drivers of perceived inflation after the euro introduction. Within its conclusions, the thesis identifies a combination of several factors that caused a rapid increase of the indicator of perceived inflation after the changeover which have their origins in a changed monetary environment. The effects coming from using rounded conversion rates instead of the official ones in mental conversions of the new euro prices to the old prices in national currencies, limited the possibility for consumers to perceive correctly the price movements. Moreover, higher sensitivity towards price increases in comparison to price decreases and a higher inflation in some areas led to blaming the new currency for high inflation. The irrational behaviour of consumers in relation to prices was strengthened by the effects of the new currency. The thesis also states that while the increase of the indicator of perceived inflation had no negative impact on inflation expectations, the deterioration of inflation perception might negatively influence consumption.
| Identifer | oai:union.ndltd.org:nusl.cz/oai:invenio.nusl.cz:77052 |
| Date | January 2005 |
| Creators | Smrčková, Gabriela |
| Contributors | Šaroch, Stanislav, Arlt, Josef, Lacina, Lubor, Čech, Zdeněk |
| Publisher | Vysoká škola ekonomická v Praze |
| Source Sets | Czech ETDs |
| Language | Czech |
| Detected Language | English |
| Type | info:eu-repo/semantics/doctoralThesis |
| Rights | info:eu-repo/semantics/restrictedAccess |
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