The Inflationary Consequence of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide

Adriani, Fabrizio; Marini, Giancarlo; Scaramozzino, Pasquale

Abstract

This paper examines the inflationary consequences of a currency changeover in the catering market. Empirical evidence from the Michelin Red Guide shows that: (i) differently from restaurants in non-euro countries, restaurants in the euro area experienced abnormal price increases just after the changeover; and (ii) among restaurants in the euro area, tourist restaurants are responsible for most of the abnormal price increases. These results suggest that proposed explanations for the changeover effect, such as menu adjustment and rounding up, are only part of the story. We present a simple model of the catering market that is consistent with the evidence.

Citation

Adriani, F., Marini, G., & Scaramozzino, P. (2009). The Inflationary Consequence of a Currency Changeover on the Catering Sector: Evidence from the Michelin Red Guide. Oxford Bulletin of Economics and Statistics, 71(1), 111-133. https://doi.org/10.1111/j.1468-0084.2008.00521.x

• Journal Article Type: Article
• Publication Date: Feb 1, 2009
• Deposit Date: Feb 3, 2009
• Journal: Oxford Bulletin of Economics and Statistics
• Print ISSN: 0305-9049
• Electronic ISSN: 1468-0084
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 71
• Issue: 1
• Pages: 111-133
• DOI: https://doi.org/10.1111/j.1468-0084.2008.00521.x