The EURO Experience : Good or Bad?

The influence on Germany has not been significant macroeconomically AFAIK - the D-Mark didn’t fluctuate wildly wrt the other European currencies before.

There has been a major influence - a psychological one. On changing to the Euro a lot of retailers and restaurants took the occasion to adjust some “signal” prices on the occasion of the changeover. As these were typically items with well-known prices, for items that were paid in cash, a public perception of an overall large increase in prices arose (the big expense items, like rent, utilities, insurance, etc. did not appreciate in the changeover, but people did not notice this as these big expenses are usually paid out automatically from one’s bank account).

This perception of a high “felt” inflation, combined with concerns about what the implication of the last years’ tax/social security/etc. reforms for one’s houshold budget were going to be (and we Germans tend to always assume the worst), led to people holding on to their money, an increased savings rate and a drop in domestic demand. This has contributed much to the last years’ lack of growth.