One currency, One Price? Euro Changeover-Related Inflation in Estonia
32 Pages Posted: 20 Sep 2014
Date Written: September 4, 2014
This paper studies euro changeover-related inflation using disaggregated price level data. The difference-in-differences approach is used and the control group for the treatment country, Estonia, is built from 12 euro area countries. The Nielsen Company disaggregated price data are employed at product, brand and shop-type level. The results indicate that while the overall inflationary effect of euro adoption was modest, the effects were significantly different across various market segments. Changeover-related inflation was higher for products that were relatively cheaper than the euro area average. Inflationary effects were stronger in smaller shops.
Keywords: euro, currency changeovers, market concentration, consumer behaviour
JEL Classification: D49, P46, E58
Suggested Citation: Suggested Citation