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 unionÐnamely 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 effectsÐover 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 InfoPaper provided by Levy Economics Institute, The in its series Economics Working Paper Archive with number wp_484.
Date of creation: Dec 2006
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Other versions of this item:
- Theodore Pelagidis & Taun Toay, 2007. "Expensive Living: The Greek Experience under the Euro," Intereconomics: Review of European Economic Policy, Springer, vol. 42(3), pages 167-176, May.
- NEP-ALL-2007-02-24 (All new papers)
- NEP-CBA-2007-02-24 (Central Banking)
- NEP-EEC-2007-02-24 (European Economics)
- NEP-MAC-2007-02-24 (Macroeconomics)
- NEP-MON-2007-02-24 (Monetary Economics)
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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- Georgios E. Chortareas & Theodore Pelagidis, 2004. "Trade flows: a facet of regionalism or globalisation?," Cambridge Journal of Economics, Oxford University Press, vol. 28(2), pages 253-271, March.
- Ehrmann, Michael, 2006. "Rational inattention, inflation developments and perceptions after the euro cash changeover," Working Paper Series 0588, European Central Bank.
- Theodore Mitrakos & Stauros Zografakis, 2005. "The redistributional impact of inflation in Greece," Economic Bulletin, Bank of Greece, Economic Research Department, issue 24, pages 45-82, January.
- Daphne Nicolitsas, 2013. "Price setting practices in Greece: evidence from a small-scale firm-level survey," Working Papers 156, Bank of Greece.
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