Type: Working Paper
Does One Currency Mean One Price?
Working Paper, EUI MWP, 2008/21
WOLSZCZAK-DERLACZ, Joanna, Does One Currency Mean One Price?, EUI MWP, 2008/21 - https://hdl.handle.net/1814/8747
Retrieved from Cadmus, EUI Research Repository
European Monetary Union was expected to have many consequences for the economies of participant countries. Theory suggested that through a higher volume of trade and stronger competition in the Eurozone, a single currency would lead to a reduction in price dispersion. As far as prices are concerned, two effects were expected: an immediate effect due to the technical characteristics of the changeover process, and a long-term one leading to price convergence. Both Euro effects are evaluated using difference-in-difference (DD) methodology. DD estimation is commonly used in the evaluation of the effects of policy programmes. Applied to the issue of introducing a single currency, the Euro effects identified are the estimated differences in price changes, price dispersion and convergence rates pre- and post-Euro between two groups of countries: Euro and non-Euro.
Cadmus permanent link: https://hdl.handle.net/1814/8747
Series/Number: EUI MWP; 2008/21
Publisher: European University Institute
Keyword(s): price convergence EMU changeover effects E31 F36 F41
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