Small European countries not adopting Euro face rising prices for traded goods.
The article examines how small European countries that haven't adopted the euro are affected in terms of prices of traded goods. By using the Sjaastad model and the Bayoumi-Eichengreen OCA index, the study shows that these countries have experienced changes in the determinants of their prices, unlike those that adopted the euro. This suggests that not adopting the euro has impacted the price-making power of major currencies in these small countries.