DP9704 Reprisals Remembered: German-Greek Conflict and Car Sales during the Euro Crisis

Author(s): Vasiliki Fouka, Hans-Joachim Voth
Publication Date: October 2013
Date Revised: September 2016
Keyword(s): boycott, Car sales, German-Greek relations, political conflict, sovereign debt crisis
JEL(s): D12, D74, F14, N14, N44
Programme Areas: International Macroeconomics, Public Economics, International Trade and Regional Economics, Economic History
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9704

Limited attention and selective memory are important forms of cognitive bias. We investigate how present events trigger selective recall, thereby changing economic behavior. The 2010-14 sovereign debt crisis in Greece created massive political conflict between the German and Greek governments. During the same period, German car sales declined sharply. Effects differed according to the actions of German troops during the occupation of Greece, 1941-44. Declines in German market share were much larger in areas where the Germans carried out massacres. Current events can reactivate past memories selectively, even in the same country, having a large effect on purchasing behavior.