Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102308
Authors: 
Berlemann, Michael
Enkelmann, Sören
Year of Publication: 
2014
Series/Report no.: 
Diskussionspapier, Helmut-Schmidt-Universität, Fächergruppe Volkswirtschaftslehre 143
Abstract: 
Are preferences exogenously given? Or do individual tastes and values evolve endogenously within a particular socio-economic environment? In this paper, we make use of a natural experiment to analyse the role of inflation experiences and institutions in the formation of individual inflation preferences. In particular, we exploit the division of post-war Germany to investigate to what extent the factual non-experience of inflation and 40 years of Communism have affected inflation preferences in East and West Germany. We find that historical experiences have a significant and long-lasting effect on people's preferences. Due to their specific political and economic background, East Germans are significantly more inflation averse than West Germans, even 20 years after reunification.
Subjects: 
endogenous preferences
inflation aversion
natural experiment
Germany
JEL: 
E02
E31
P22
Document Type: 
Working Paper

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