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The euro and prices: changeover-related inflation and price convergence in the euro area

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Author Info

  • Jan-Egbert Sturm
  • Ulrich Fritsche
  • Michael Graff
  • Michael Lamla
  • Sarah Lein
  • Volker Nitsch
  • David Liechti
  • Daniel Triet

Abstract

The purpose of the study is to examine the effects of the 'euro cash changeover' on consumer prices in the euro area. The report begins by describing price developments at the time of the introduction of euro notes and coins. The study also investigates the impact of price developments at the euro changeover on different households by socio-economic group. The third part of the report focuses on inflation perceptions and a fourth section explores the cross-border convergence of prices since the euro changeover. The following findings can be highlighted: (1) it appears that aggregate inflation rates were largely unaffected by the introduction of the euro; (2) overall, differences in inflation rates across different types of households are small; (3) inflation perceptions are mainly driven by lagged perceptions, inflation expectations and actual inflation while different individual inflation experiences also help to explain the 'jumps' in perception data; (4) price differentials have generally declined over time across European countries though there is no sizeable euro introduction convergence effect.

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File URL: http://ec.europa.eu/economy_finance/publications/publication15287_en.pdf
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Bibliographic Info

Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 381.

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Length: 234 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:euf:ecopap:0381

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Keywords: The Euro and Prices: Changeover-related Inflation and Price Convergence in the Euro Area; euro changeover; inflation; perceptions; convergence; household-specific inflation; Sturm; Fritsche; Graff; Lamla; Lein; Nitsch; Liechti; Triet;

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References

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Cited by:
  1. D'Adamo, Gaetano & Rovelli, Riccardo, 2013. "The Role of the Exchange Rate Regime in the Process of Real and Nominal Convergence," IZA Discussion Papers 7627, Institute for the Study of Labor (IZA).
  2. Liontakis, Angelos E. & Papadas, Christos T., 2009. "Distribution Dynamics of Food Price Inflation Rates in EU: An Alternative Conditional Density Estimator Approach," 113th Seminar, September 3-6, 2009, Chania, Crete, Greece 58084, European Association of Agricultural Economists.
  3. Karsten Staehr, 2010. "Income convergence and inflation in Central and Eastern Europe : does the sun always rise in the East," Bank of Estonia Working Papers wp2010-04, Bank of Estonia, revised 22 Mar 2010.
  4. Svatopluk Kapounek & Lubor Lacina, 2011. "Inflation Perceptions and Anticipations in the Old Eurozone Member States," Prague Economic Papers, University of Economics, Prague, vol. 2011(2), pages 120-139.
  5. Angelos Liontakis & Dimitris Kremmydas, 2013. "Food Inflation in EU: Distribution Analysis and Spatial Effects," Working Papers 2013-3, Agricultural University of Athens, Department Of Agricultural Economics.

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