Does Inflation Matter The Influence of Perceived Price Changes on Well-being

Abstract

We confirm the inflation and well-being correlation scheme while filling the
gap in the literature and estimating the effects of inflation perception on wellbeing. We discover the significant heterogeneity in attitudes toward inflation and
inflation perception among European countries. While the inflation perception
influence on well-being in Eastern Europe is higher than the influence of HICP,
for Western Europe, it is the opposite. Both groups differ in terms of the
marginal rate of substitution between inflation and unemployment – the effects
of higher unemployment are more severe in comparison to the influence of
inflation in Western Europe.