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Will the euro conversion affect price stability?

Author

Listed:
  • Martin Hüfner
  • Wolfgang Nierhaus

Abstract

Prior to the converting of DM prices into euro prices, many feared that the conversion will be used to increase prices. According to estimations by Dr. Martin Hüfner, Chief Economist of the HVB Group, prices in Germany will increase by about half a percentage point as a result of the introduction of the euro currency, with most of this price adjustment already having occurred in the second quarter of the year. At the beginning of the coming year, when the euro currency is actually in circulation, prices are not expected to increase any more but will, in fact, drop significantly "since then the retailers will in fact round off down to the next euro threshold price. We project that the euro-effect on inflation in the first and second quarters will be a lowering of 0.2 percentage points for each quarter." According to the appraisal of Dr. Wolfgang Nierhaus, Ifo Institute, the impending introduction of the euro currency has not lead to an additional burden on consumer budgets. The recent price increases can very well be attributable to other factors.

Suggested Citation

  • Martin Hüfner & Wolfgang Nierhaus, 2001. "Will the euro conversion affect price stability?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(18), pages 03-10, October.
    • Handle: RePEc:ces:ifosdt:v:54:y:2001:i:18:p:03-10
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    File URL: https://www.ifo.de/DocDL/ifosd_2001_18_1.pdf
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    References listed on IDEAS

    as
    1. Willi Leibfritz & Wolfgang Nierhaus & Wolfgang Meister, 2001. "Wirtschaftsperspektiven 2001/2002 und Entwicklung in Ostdeutschland," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(04), pages 8-32, September.
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    1. Wolfgang Nierhaus, 2001. "Business forecasts and forecasting risks," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(16), pages 17-21, October.

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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