- Title
- The Effects of the Euro-Conversion on Prices and Price Perceptions
- Author(s)
- Giovanni Mastrobuoni Giovanni Mastrobuoni (Princeton University)
- Abstract
- Despite the expectations of economists that the euro changeover would have no effect on prices, I show that European consumers perceive the contrary. The data indicate that consumers based their perceptions about inflation on goods that are frequently purchased. I use this insight to develop and estimate a model of imperfect information that explains why these goods were subject to higher price growth after the changeover. The data indicate that Spain, Italy and France show a stronger euro-effect on prices. The data also suggest that this price growth is correlated with consumers' ability to adapt to the new currency.
- Creation Date
- 2004-09
- Section URL ID
- CEPS
- Paper Number
- 101
- URL
- https://gceps.princeton.edu/wp-content/uploads/2017/01/101mastrobuoni.pdf
- File Function
- Jel
- D83, F33, L11
- Keyword(s)
- euro, currency changeover, imperfect information, search costs, price setting
- Suppress
- false
- Series
- 3