Cross-country price dispersion in the euro era: a case study of the European car market
Abstract"This paper investigates the effects of the European monetary union on cross-country price differences in the European car market. The analysis utilizes disaggregate, bi-annual data on the prices of almost all car models sold in the 15 countries of the European Union over 1993-2003. The data refer to identical models, with identical specifications and options. To identify the euro's effect, we exploit the fact that out of the 15 countries in our sample, 12 joined Euroland at the beginning of 1999 and officially adopted the euro as their national currency at the beginning of 2002, while 3 countries remained outside the monetary union. We investigate whether there is a systematic difference in the evolution of cross-country price dispersion between Euroland members and non-members after 1999. Our analysis distinguishes between Phase I (monetary union with national currencies preserved, 1999-2001) and Phase II (official adoption of the euro as a national currency in 2002). We examine the evolution of both the absolute price differentials across countries, and the speed with which deviations from the long-term cross-country differentials are eliminated." Copyright � CEPR, CES, MSH, 2004.
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Bibliographic InfoArticle provided by CEPR & CES & MSH in its journal Economic Policy.
Volume (Year): 19 (2004)
Issue (Month): 40 (October)
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