We analyze price convergence in a currency union, in which the members have different initial price levels at its formation. We provide theoretical justification for the claim that the path of price adjustment should be asymmetric, i.e., it should occur mostly in the initially cheap country. Empirically, we evaluate the magnitude of price level adjustment after German reunification. Using these findings, we draw implications for price developments in the EMU-acceding countries. Journal of Comparative Economics 32 (3) (2004) 467–481.