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The Euro Changeover and its Effects on Price Transparency and Inflation Author info | Abstract | Publisher info | Download info | Related research | Statistics Giovanni Mastrobuoni
Wioletta Dziuda
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Despite the expectations of economists that the euro changeover would have no effect on prices, we show that European consumers perceived the contrary. The data indicate that consumers based their perceptions about inflation on goods that are cheaper and more frequently purchased. We use this insight to develop and estimate a model of imperfect information that explains why these goods were subject to higher price growth after the changeover. The data indicate that some retailers, aware of the consumers' diffculties in adopting the new currency, used the changeover to increase profits by increasing prices. We also propose an explanation of why this effect was smaller in more concentrated retail markets.
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Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number
26.
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Length: 40 pages
Date of creation: 2005Date of revision:
2006Handle: RePEc:cca:wpaper:26Contact details of provider: Postal: Via Real Collegio, 30, 10024 Moncalieri (To) Phone: +390116705000 Fax: +390116476847 Email: Web page: http://www.carloalberto.org/ More information through EDIRC
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Keywords: euro ; currency changeover ; imperfect information ; search costs ; price setting. ; Other versions of this item:
Find related papers by JEL classification: D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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References listed on IDEAS 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.: Giancarlo Marini & Fabrizio Adriani & Pasquale Scaramozzino, 2003.
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Arturo Bris & Augusto Rupérez-Micola, 2008.
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Thomas A. Eife & W. Timothy Coombs, 2007.
"Coping with People's Inflation Perceptions during a Currency Changeover ,"
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0458, University of Heidelberg, Department of Economics, revised Nov 2007.
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Other versions: Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2008.
"The Inflationary Consequences of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide ,"
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08/604, Department of Economics, University of Bristol, UK.
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Other versions: Sarah M. Lein & Thomas Maag, 2008.
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Thomas Maag, 2009.
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Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2008.
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Paolo Angelini & Francesco Lippi, 2007.
"Did Prices Really Soar after the Euro Cash Changeover? Evidence from ATM Withdrawals ,"
International Journal of Central Banking ,
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