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The Inflationary Consequences of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide*

Fabrizio Adriani, Giancarlo Marini and Pasquale Scaramozzino

Oxford Bulletin of Economics and Statistics, 2009, vol. 71, issue 1, 111-133

Abstract: This paper examines the inflationary consequences of a currency changeover in the catering market. Empirical evidence from the Michelin Red Guide shows that: (i) differently from restaurants in non‐euro countries, restaurants in the euro area experienced abnormal price increases just after the changeover; and (ii) among restaurants in the euro area, tourist restaurants are responsible for most of the abnormal price increases. These results suggest that proposed explanations for the changeover effect, such as menu adjustment and rounding up, are only part of the story. We present a simple model of the catering market that is consistent with the evidence.

Date: 2009
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https://doi.org/10.1111/j.1468-0084.2008.00521.x

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Oxford Bulletin of Economics and Statistics is currently edited by Christopher Adam, Anindya Banerjee, Christopher Bowdler, David Hendry, Adriaan Kalwij, John Knight and Jonathan Temple

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