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Price setting behaviour and price setting regulations at the euro changeover

  • Thomas A. Eife

    ()

This paper documents that the impact of the euro changeover in January 2002 on prices was not uniform across the 12 participating countries. There are countries where prices increased significantly, but there are also countries where price-setting behaviour during the changeover does not appear to be very different from other points in time. This paper argues that the above difference can be explained by looking at the way countries regulated price setting during the changeover, and that any impact of the changeover could have been avoided with appropriate regulations. The gap between the actual and the perceived impact is addressed and policy recommendations for future changeovers are provided

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File URL: http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2006/_wp_606.pdf
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Paper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number 2006-06.

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Length: 35 pages
Date of creation: 10 Oct 2006
Date of revision: 12 Oct 2006
Publication status: published
Handle: RePEc:eea:boewps:wp2006-06
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References listed on IDEAS
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  1. Patrick Lünnemann & Thomas Y. Mathä, 2010. "Rigidities and inflation persistence of services and regulated prices," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 193-208.
  2. Marco G. Ercolani & Jayasri Dutta, 2006. "The Euro-changeoverand Euro-inflation: Evidence from Eurostat's HICP," Discussion Papers 06-03, Department of Economics, University of Birmingham.
  3. Gaiotti, Eugenio & Lippi, Francesco, 2005. "Pricing Behaviour and the Introduction of the Euro: Evidence from a Panel of Restaurants," CEPR Discussion Papers 4893, C.E.P.R. Discussion Papers.
  4. Manfred Fluch & Helmut Stix, 2005. "Perceived Inflation in Austria – Extent, Explanations, Effects," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 22–47.
  5. Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2004. "The Inflationary Consequences Of A Currency Changeover: Evidence From The Michelin Red Guide," Royal Economic Society Annual Conference 2004 45, Royal Economic Society.
  6. C.K. Folkertsma & C. van Renselaar & A.C.J. Stokman, 2002. "Smooth Euro Changeover, Higher Prices? Results of a Survey Among Dutch Retailers," WO Research Memoranda (discontinued) 682, Netherlands Central Bank, Research Department.
  7. Ehrmann, Michael, 2006. "Rational inattention, inflation developments and perceptions after the euro cash changeover," Working Paper Series 0588, European Central Bank.
  8. Angelini, Paolo & Lippi, Francesco, 2005. "Did Inflation Really Soar After the Euro Cash Changeover? Indirect Evidence from ATM Withdrawals," CEPR Discussion Papers 4950, C.E.P.R. Discussion Papers.
  9. Kooreman, Peter & Faber, Riemer P & Hofmans, Heleen M J, 2004. "Charity Donations and the Euro Introduction: Some Quasi-Experimental Evidence on Money Illusion," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1121-24, December.
  10. Eife, Thomas, 2006. "Currency Changeovers as Natural Experiments," Munich Dissertations in Economics 5839, University of Munich, Department of Economics.
  11. Carlos Coimbra & Daniel Santos & Rui Evangelista & Teresa Nascimento, 2002. "Analysis on the Impact of the Conversion of Escudos into Euros," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  12. repec:pri:cepsud:101mastrobuoni is not listed on IDEAS
  13. Thomas A. Eife, 2008. "Do Menu Costs Make Prices Sticky?," Working Papers 0477, University of Heidelberg, Department of Economics, revised Oct 2008.
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