Transitional Price Rises with the Adoption of the Euro: Aggregate and Disaggregate Sector Evidence

Marco Ercolani

Discussion Papers from Department of Economics, University of Birmingham

Abstract: This paper presents a time-series regression analysis of price in ation at the time of the euro currency changeover in January 2002. Cross-equation tests on twelve euro countries and three non-euro EU countries are used to identify significant changes in in ation around that time. For a small number of prod- uct and service categories (mainly small-scale service industries), higher than expected in ation immediately after the euro currency changeover suggest the possible existence of menu costs, sellers' rounding up of prices or buyers' tem- porary rational inattention. However, the lack of evidence for reduced in ation immediately prior to the euro changeover suggests menu costs are not impor- tant.

Keywords: Euro changeover; inflation; menu costs; price rounding; rational inattention (search for similar items in EconPapers)
JEL-codes: D12 D40 D84 E31 E52 E63 L89 (search for similar items in EconPapers)
Pages: 108 pages
Date: 2009-12
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://repec.cal.bham.ac.uk/pdf/09-18.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bir:birmec:09-18

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of Birmingham Contact information at EDIRC.
Bibliographic data for series maintained by Oleksandr Talavera ().