7/2014 Jaanika Meriküll and Tairi Rõõm. One currency, one price? Euro changeover-related inflation in Estonia

Working Papers of Eesti Pank 7/2014

Published in Journal of Common Market Studies, 2015 and published in ECB Working paper series, No 1732/September 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. Changeoverrelated inflation was higher for products that were relatively cheaper than the euro area average. Inflationary effects were stronger in smaller shops.

JEL Codes: D49, P46, E58

Keywords: euro, currency changeover, market concentration, consumer behaviour

Corresponding authors e-mail address: jaanika.merikyll [at] eestipank.ee

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The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank.