Expensive Living: The Greek Experience under the Euro
AbstractApart from its widely accepted direct advantages, the introduction of the euro has been accompanied by a surge of inflation in most of the EU member states. At the same time, wages--in part, wages of the unskilled--are relatively losing ground, while the purchasing power of the average European seems also to have weakened since the introduction of the single currency. In this paper we deal with five relevant central issues to interpret "expensiveness" in Greece. First, we examine to what extent recent inflation trends are attributable to the constraints imposed by the monetary unionÃnamely negative demand disturbances in certain Greek regions. Second, we investigate to what extent these patterns are also due to the adoption of the euro--including conversion period effectsÃover product market and other domestic rigidities. Third, we investigate the impact of seasonal effects on inflation, in the context of the Greek so-called traditional "petit-bourgeois capitalism." Fourth, we explore the extent to which unemployment is another factor that drives wages and purchasing power down. Fifth, we apply the Balassa-Samuelson effect to see whether it constitutes the culprit for price hikes in nontradable products in particular. We find that all the aforementioned factors contribute to the Greek expensiveness.
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Bibliographic InfoArticle provided by Springer in its journal Intereconomics.
Volume (Year): 42 (2007)
Issue (Month): 3 (May)
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Web page: http://www.springerlink.com/link.asp?id=113472
Other versions of this item:
- Taun N. Toay & Theodore Pelagidis, 2006. "Expensive Living: The Greek Experience under the Euro," Economics Working Paper Archive wp_484, Levy Economics Institute.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eugenio Gaiotti & Francesco Lippi, 2005.
"Pricing behavior and the introduction of the euro: evidence from a panel of restaurants,"
0501029, EconWPA, revised 15 Feb 2005.
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