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The Inflationary Consequences of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide

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  • Fabrizio Adriani
  • Giancarlo Marini
  • Pasquale Scaramozzino

Abstract

This paper examines the inflationary consequences of a currency changeover in the catering market. Empirical evidence from the Michelin Red Guide shows that: (i) differently from restaurants in non‐euro countries, restaurants in the euro area experienced abnormal price increases just after the changeover; and (ii) among restaurants in the euro area, tourist restaurants are responsible for most of the abnormal price increases. These results suggest that proposed explanations for the changeover effect, such as menu adjustment and rounding up, are only part of the story. We present a simple model of the catering market that is consistent with the evidence.

Suggested Citation

  • Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2009. "The Inflationary Consequences of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 111-133, February.
    • Handle: RePEc:bla:obuest:v:71:y:2009:i:1:p:111-133
    DOI: 10.1111/j.1468-0084.2008.00521.x
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    1. Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2009. "The Inflationary Consequences of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 111-133, February.
    2. Amelie Gamble, 2007. "The “Euro Illusion”: Illusion or Fact?," Journal of Consumer Policy, Springer, vol. 30(4), pages 323-336, December.
    3. Michel Beine & Étienne Farvaque, 2011. "Clause de non-renouvellement et rigidité des prix. Résultats sur le secteur de l'édition en France," Revue économique, Presses de Sciences-Po, vol. 62(1), pages 57-66.
    4. Antonio Filippin & Luca Nunziata, 2019. "Monetary effects of inequality: lessons from the euro experiment," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 99-124, June.
    5. Michael Ehrmann, 2011. "Inflation Developments and Perceptions after the Euro Cash Changeover," German Economic Review, Verein für Socialpolitik, vol. 12(1), pages 33-58, February.
    6. Raitano, Michele & Fantozzi, Roberto, 2015. "Political cycle and reported labour incomes in Italy: Quasi-experimental evidence on tax evasion," European Journal of Political Economy, Elsevier, vol. 39(C), pages 269-280.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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