Working Paper Series
Producer Prices in the Transition to a Common Currency
() and Lars Oxelheim
Abstract: We analyze producer price developments in the transition
from a national exchange rate regime to a monetary union. The focus is on
the European Economic and Monetary Union (EMU). Stylized facts witness
about an exploding gaps in producer-price inflation during the years
immediately following the completion of the EMU. Price convergence is found
to be an important driver throughout the entire euro period (1999-2005),
but with no significant differences in speed compared to the pre euro
period. Productivity growth had its primary effect in the first years and
effective exchange-rate changes in the later years of the euro period.
Keywords: Producer prices; Relative prices; Price convergence; Euro; Balassa-Samuelson; (follow links to similar papers)
JEL-Codes: E31; E44; F15; F23; G34; (follow links to similar papers)
48 pages, September 22, 2006
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