Publication Date: March 1996
A questionnaire survey was conducted to explore how people think about inflation, and what real problems they see it as causing. With results from 677 people, comparisons were made among people in the U.S., Germany, and Brazil, between young and old, and between economists and non-economists. Among non-economists in all countries, the largest concern with inflation appears to be that it lowers people’s standard of living. Non-economists appear often to believe in a sort of sticky-wage model, by which wages do not respond to inflationary shocks, shocks which are themselves perceived as caused by certain people or institutions acting badly. This standard of living eﬀect is not the only perceived cost of inflation among non-economists; other perceived costs are tied up with issues of exploitation, political instability, loss of morale, and damage to national prestige. The most striking diﬀerences between groups studied were between economists and non-economists. There were also important international and intergenerational diﬀerences.
Published in Christina D. Romer and David H. Romer, eds., Reducing Inflation: Motivation and Strategy, NBER, 1997, pp. 13-70 [NBER]