Paper #1394

Title:

Reprisals remembered: German-Greek conflict and car sales during the Euro crisis

Authors:

Vasiliki Fouka and Joachim Voth

Date:

December 2012 (Revised: October 2013)

Abstract:

During the Greek debt crisis after 2010, the German government insisted on harsh austerity measures. This led to a rapid cooling of relations between the Greek and German governments. We compile a new index of public acrimony between Germany and Greece based on newspaper reports and internet search terms. This information is combined with historical maps on German war crimes during the occupation between 1941 and 1944. During months of open conflict between German and Greek politicians, German car sales fell markedly more than those of cars from other countries. This was especially true in areas affected by German reprisals during WorldWar II: areas where German troops committed massacres and destroyed entire villages curtailed their purchases of German cars to a greater extent during conflict months than other parts of Greece. We conclude that cultural aversion was a key determinant of purchasing behavior, and that memories of past conflict can affect economic choices in a time-varying fashion. These findings are compatible with behavioral models emphasizing the importance of salience for individual decision-making.

Keywords:

Consumer boycott, cultural aversion, political conflict, memory, salience, car sales, Euro crisis, German-Greek relations.

JEL codes:

D12, D74, F14, N14, N44

Area of Research:

Economic and Business History / Macroeconomics and International Economics

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