ABSTRACT

This paper addresses how the adoption of a common currency affected the agricultural sector of the Euro-zone members. Firstly, by examining time series data of agricultural price deflators I attempt to determine whether the introduction of the euro caused a structural change within the series. In addition, I will also look at cross-country price dispersion to show that the adoption of a common currency fostered price convergence as theory predicts. I will then conclude that the introduction of the euro had positive effects for the agricultural products market favoring greater transparency and efficiency. This paper is divided as follows: Part I introduces the topic, summarizes the theory and reviews existing literature. Part II explains the empirical framework and Part III presents empirical results. Finally Part IV discusses potential problems and includes some concluding remarks.