This paper proposes a solution to the post-crisis Eurozone "missing inflation" puzzle. I demonstrate that following an initially subdued inflation, economic agents started to forecast inflation by extrapolating past inflation developments as opposed to utilizing a purely forward-looking model. I...

We assess whether euro area inflation expectations, as measured by break-even inflation rates (BEIRs), have remained anchored during the financial crisis. Since autumn 2008, the volatility of BEIRs has increased considerably. We treat observed BEIRs as a sum of `genuine BEIRs' and additional...

This paper uses the euro cash changeover to test theories of finite informationprocessing capacities on the side of consumers. It argues that the denomination of prices in a new currency has increased the information-processing requirements for consumers by more than for sellers, a wedge that...

This paper uses the European Commission's Consumer Survey to assess whether inflation expectations have converged and whether inflation uncertainty has diminished following the introduction of the Euro in Europe. Consumers' responses to the survey suggest that inflation expectations depend more...