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The Euro-changeoverand Euro-inflation: Evidence from Eurostat's HICP

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  • Marco G. Ercolani
  • Jayasri Dutta

Abstract

Though anecdotal evidence suggests that retail price inflation increased temporarily in January 2002 when Euro notes and coins were introduced, the evidence from official statistics largely refutes this. We test for the presence of a sudden temporary increase in inflation for Euro-changeover countries. We use the countries that did not join the Euro: Denmark, Sweden and the UK; as a control group. Though the results are sensitive to the estimation method, we do uncover weak evidence of a minor increase in aggregate inflation in January 2002 for the countries that did join the Euro. Similar tests for the Restaurant sector find a strong Euro-changeover effect on temporary inflation. Summary tests for 129 other price sub-categories are also discussed.

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File URL: ftp://ftp.bham.ac.uk/pub/RePEc/pdf/ErcolaniDutta0603.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 06-03.

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Length: 53 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:bir:birmec:06-03

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Postal: Edgbaston, Birmingham, B15 2TT
Web page: http://www.economics.bham.ac.uk
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Cited by:
  1. Isabell Koske, 2011. "Price effects of the euro cash changeover: the role of product market competition," Empirica, Springer, vol. 38(2), pages 223-230, May.
  2. Thomas A. Eife, 2006. "Price setting behaviour and price setting regulations at the euro changeover," Bank of Estonia Working Papers 2006-06, Bank of Estonia, revised 12 Oct 2006.
  3. Giovanni Mastrobuoni & Wioletta Dziuda, 2005. "The Euro Changeover and its Effects on Price Transparency and Inflation," Carlo Alberto Notebooks 26, Collegio Carlo Alberto, revised 2006.

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