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Price Convergence under EMU? First Estimates

  • Matthias Lutz

    ()

This paper examines whether European monetary union has lowered the degree of price dispersion among member countries. The difference-in-differences methodology is applied to four independent data sets containing prices of identical goods. While the results reported in the paper vary somewhat across goods, they provide little overall support of the European Commission's claim that the single currency would significantly deepen market integration among the euro-zone countries. Even though this should be viewed as preliminary evidence, it does suggest that there are other, more important impediments to market integration in the EU.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/dp2003/dp0308lutz_ganz.pdf
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Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2003 with number 2003-08.

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Length: 27 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:usg:dp2003:2003-08
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  1. Frondel, Manuel & Schmidt, Christoph M., 2001. "Evaluating environmental programs: the perspective of modern evaluation research," ZEW Discussion Papers 01-59, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  9. Engel, C. & Rogers, J.H., 1995. "How Wide is the Border?," Papers 4-95-16, Pennsylvania State - Department of Economics.
  10. Ong, Li Lian, 1997. "Burgernomics: the economics of the Big Mac standard," Journal of International Money and Finance, Elsevier, vol. 16(6), pages 865-878, December.
  11. Alan M. Taylor, 2000. "A Century of Purchasing-Power Parity," NBER Working Papers 8012, National Bureau of Economic Research, Inc.
  12. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  13. Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 433-462, October.
  14. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
  15. Matthias Lutz, 2000. "EU Commission versus Volkswagen: New Evidence on Price Differentiation in the European Car Market," Review of Industrial Organization, Springer, vol. 17(3), pages 313-323, November.
  16. Melitz, Jacques, 2001. "Geography, Trade and Currency Union," CEPR Discussion Papers 2987, C.E.P.R. Discussion Papers.
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