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• A behavioral economics approach to perceived inflation

  46-71.

  András Tréfás

  Views:

  273

  Recent years have brought an era of extremely low inflation both in Hungary and in the EU. However, the inflation perceived by consumers has not followed precisely the same path. In the article I attempt to shed light on the underlying causes of this discrepancy, using the concepts of behavioral economics. A summary of the results of the relevant literature and an empirical analysis of Hungarian perceived inflation patterns (both on the aggregate level and for demographic groups) form the backbone of the article. The main findings of the research show that there is a significant bias in the inflation perceptions of Hungarian individuals, caused by psychological phenomena. The extent of the bias varies among sociodemographic groups, but not in exactly the same way as one would expect from the literature.

  Journal of Economic Literature (JEL) codes: E03

• The conceptual inconsistency of the rational anticipation theory

  103-126

  Peter Galbacs

  Views:

  258

  In this article we analyse various contradictions in the assumptions and consquences forming the theory of rational expectations. The argument aims to demonstrate that important parts of the theory cannot be maintained at the same time without damaging the theory's logical structure, while we recognize that other parts force the theory far from the basis of reality. However, the rational ecpectations hypothesis is not simply a useless theoretical construct, since by delineating the proper boundaries of this hypothesis we can offer a clear justification for the operability of inflation targeting systems. If we relax the strong presumptions, giving a place to a monetary authority that is able and calculated to drive by Muth, although some consequences of this conception will be consistent with the assumptions - which depend on conditions that seem not to hold - of the original (strong) definition.

  Journal of Economic Literature (JEL) codes: B2, E5.

• A literature review of Happiness and Economics and guide to needed research

  117-131

  Thomas Wiese

  Views:

  664

  Happiness and Economics as a new branch of behavioural economics has had a major impact on economic theory and economic policy: Several studies have been published in the last 20 years in leading journals. Furthermore, several governments have decided to collect data about the well-being of their citizens. The author claims that utility cannot only be measured by the choices individuals do: Reported happiness and life satisfaction data is also an acceptable empirical estimate for individual utility. Consequently, happiness research can bear new knowledge and important understanding of human welfare. Therefore, this paper gives an overview of the existing literature. Methods and approach of scholars is critically analysed and shortcomings are discussed. Thereafter, findings on major economic issues like growth, unemployment and inflation are presented. Besides, governmental policy and implications for society are debated. Lastly, future research possibilities are mentioned.

  Journal of Economic Literature (JEL) Classification: D60 D63 I31

• Economy of Austria

  125-148

  Kitti Vass

  Views:

  159

  In my article I examine a member state of the European Union, the open and federal Austria, which can be considered as an example of a corporate economy. During the reconstruction period following the Second World War the Austrian economy was characterized by a frantic economic expansion. After the oil crisis, an incomparably low inflation rate and low unemployment, and the more dynamic than average economic growth attracted attention to the country. Due to the intensified external economic interest, the Austrian model - namely the economic policy and establishment - was widely studied at this time. However, at the beginning of the 1980's some structural problems appearing in the economy contributed to slowdown in growth, until the political changes of the year 2000, which finally brought a new favourable turn in economic policy. I start with an examination of Austria's economic status after the Second World War, then the development, changes and role of the Austrian social partnership. I go on to analyze today's Austria from the point of view of the sustainable balanced budget, focusing on the financial circumstances of the state, such as the complex financial connections derived from federalism.

  Journal of Economic Literature (JEL): H62, H63