Paper #1086

Títol:

Separated by a common currency? Evidence from the Euro changeover

Autors:

Arturo Bris i Augusto Rupérez-Micola

Data:

Març 2008

Resum:

We study the price convergence of goods and services in the euro area in 2001-2002. To measure the degree of convergence, we compare the prices of around 220 items in 32 European cities. The width of the border is the price di�erence attributed to the fact that the two cities are in different countries. We find that the 2001 European borders are negative, which suggests that the markets were very integrated before the euro changeover. Moreover, we do not identify an integration effect attributable to the introduction of the euro. We then explore the determinants of the European borders. We find that different languages, wealth and population differences tend to split the markets. Historical inflation, though, tends to lead to price convergence.

Paraules clau:

Euro, economic integration

Codis JEL:

F15

Àrea de Recerca:

Economia de l'Empresa i Organització Industrial

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