The Euro Changeover in Estonia: implications for inflation

Tairi Room and Katri Urke

No wp2014-6, Bank of Estonia Working Papers from Bank of Estonia

Abstract: Estonia changed over from the kroon to the euro in January 2011. This paper analyses the inflationary effect of this event. The analysis is based on the Harmonised Indices of Consumer Prices. The difference-in-differences method is employed where the treated group is Estonia and the control group consists of the other EU member states. The estimation results imply that the inflationary impact of the euro changeover was either insignificant or small in magnitude, depending on which treatment period is considered. The acceleration in inflation mostly occurred in the second half of 2010, during the six-month period prior to the adoption of the euro. Although the actual effect of the euro changeover on inflation was modest, most Estonian citizens felt that the introduction of the new currency increased consumer prices considerably.

Keywords: euro; currency changeover; consumer prices; inflation (search for similar items in EconPapers)
JEL-codes: D49 E58 P46 (search for similar items in EconPapers)
Date: 2014-10-10, Revised 2014-10-10
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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