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Producer Prices in the Transition to a Common Currency

  • Andrén, Niclas

    ()

    (Institute of Economic Research)

  • Oxelheim, Lars

    ()

    (Research Institute of Industrial Economics)

We analyze producer price developments in the transition from a national exchange rate regime to a monetary union. The focus is on the European Economic and Monetary Union (EMU). Stylized facts witness about an exploding gaps in producer-price inflation during the years immediately following the completion of the EMU. Price convergence is found to be an important driver throughout the entire euro period (1999-2005), but with no significant differences in speed compared to the pre euro period. Productivity growth had its primary effect in the first years and effective exchange-rate changes in the later years of the euro period.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 668.

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Length: 48 pages
Date of creation: 22 Sep 2006
Date of revision:
Handle: RePEc:hhs:iuiwop:0668
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