In Search of a Euro Effect: Big Lessons from a Big Mac Meal?

Was the adoption of the euro accompanied by an increase in prices? Did it promote goods market arbitrage in the form of faster convergence to a common price? By comparing the experience of eurozone countries to non-euro European countries in a "difference-in-differences" specification, we net out effects on prices unrelated to the euro. We find neither evidence of significant price increases associated with the euro, nor evidence of a significant improvement in market integration.

Available here is a preprint version of this article. The final version may be found at http://dx.doi.org/10.1016/j.jimonfin.2007.12.008.