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Attractive Prices and Euro-Rounding Effects on Inflation

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  • Aucremanne, L.
  • Cornille, D.
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    Abstract

    Approximately 70% of Belgian consumer prices are to be considered as attractive prices, namely psychological prices, fractional prices - i.e. prices which are convenient to pay - and round prices. Conversion to these prices into euro generally leads to prices which are no longer attractive and it is very likely that retailers will round their prices to attractive euro prices. The public fears that rouding will be upward than symmetric. This paper simulates in the first instancea worst-case scenario, whereby all attractive BEF prices are systematically rounded up to the nearest attractive euro price.

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    Bibliographic Info

    Paper provided by Warwick - Development Economics Research Centre in its series Papers with number 17.

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    Length: 35 pages
    Date of creation: 2001
    Date of revision:
    Handle: RePEc:fth:warwde:17

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    Postal: University of Warwick, Development Economics Research Center, Coventry CV4 7AL, United Kingdom.
    Phone: +44 (0) 2476 523202
    Fax: +44 (0) 2476 523032
    Web page: http://www.warwick.ac.uk/fac/soc/Economics/
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    Keywords: PRIX ; CONSUMPTION;

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    Cited by:
    1. Franco Mostacci & Roberto Sabbatini, 2003. "L 'euro ha creato inflazione? Changeover e arrotondamenti dei prezzi al consumo in Italia nel 2002," Moneta e Credito, Economia civile, vol. 56(221), pages 45-95.
    2. Wioletta Dziuda & Giovanni Mastrobuoni, 2009. "The Euro Changeover and Its Effects on Price Transparency and Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(1), pages 101-129, 02.
    3. Aucremanne, Luc & Dhyne, Emmanuel, 2004. "How frequently do prices change? Evidence based on the micro data underlying the Belgian CPI," Working Paper Series 0331, European Central Bank.
    4. Aucremanne, Luc & Druant, Martine, 2005. "Price-setting behaviour in Belgium: what can be learned from an ad hoc survey?," Working Paper Series 0448, European Central Bank.
    5. Luis J. Álvarez & Ignacio Hernando, 2004. "Price setting behaviour in Spain: stylised facts using consumer price micro data," Banco de Espa�a Working Papers 0422, Banco de Espa�a.
    6. Ehrmann, Michael, 2006. "Rational inattention, inflation developments and perceptions after the euro cash changeover," Working Paper Series 0588, European Central Bank.

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