When asked what is the worst thing that could happen to the
economy German people answer inflation and Americans answer
unemployment. This difference is deeply rooted in the experience
of the two countries during the turbulent economic times between
the two world wars. Germany experienced what is still considered
to be one of the worst inflation periods of all times and the
U.S. population was traumatized by a sky high unemployment rate.
Almost a century later these experiences affect how people think
and how societies structure their economic policies – the German
authorities place a top priority on controlling inflation
whereas the U.S. government is vigilant on unemployment. The
effect of prior negative experiences on expectations and
behavior was confirmed recently in a new research report using
data from Bulgaria. Bulgaria is a small country is Southern
Europe, one of the Soviet satellites that began market and
political reforms in the beginning of the 1990’s. It was,
however, too eager to liberalize its