Price Convergence Under Emu? First Estimates
University of St. Gallen, Economics Discussion Paper No. 2003-08
27 Pages Posted: 6 Jun 2003
Date Written: March 2003
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.
Keywords: EMU, price convergence, difference-in-differences
JEL Classification: F15, F33, F36
Suggested Citation: Suggested Citation