Exchange Rate Pass Through Currency Of Invoicing And Market Share
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Exchange Rate Pass Through Currency Of Invoicing And Market Share
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Author : Michael B. Devereux
language : en
Publisher:
Release Date : 2015
Exchange Rate Pass Through Currency Of Invoicing And Market Share written by Michael B. Devereux and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with Currency question categories.
This paper investigates the impact of market structure on the joint determination of exchange rate pass- through and currency of invoicing in international trade. A novel feature of the study is the focus on market share of firms on both sides of the market-that is, exporting firms and importing firms. A model of monopolistic competition with heterogeneous firms has the following set of predictions: a) exchange rate pass-through should be non-monotonic and U-shaped in the market share of exporting firms, but monotonically declining in the market share of importers; b) exchange rate pass-through should be lower, the higher is local currency invoicing of imports; and c) producer currency invoicing should be related non-monotonically and U-shaped to exporter market share, and monotonically declining in importing firms' market share. We test these predictions using a new and large micro data set covering the universe of Canadian imports over a six-year period. The data strongly support all three predictions.
Exchange Rates Pass Through Currency Of Invoicing And Market Share
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Author : Michael B. Devereux
language : en
Publisher:
Release Date : 2015
Exchange Rates Pass Through Currency Of Invoicing And Market Share written by Michael B. Devereux and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
The Exchange Rate Pass Through To Import And Export Prices
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Author : Ehsan U. Choudhri
language : en
Publisher: International Monetary Fund
Release Date : 2012-09-01
The Exchange Rate Pass Through To Import And Export Prices written by Ehsan U. Choudhri and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-09-01 with Business & Economics categories.
Using both regression- and VAR-based estimates, the paper finds that the exchange rate pass-through to import prices for a large number of countries is incomplete and larger than the pass-through to export prices. Previous studies have reported similar results, which give rise to the puzzle that while local currency pricing is needed to account for incomplete import price pass-through, it would not imply a lower export price pass-through. Recent explanations of this puzzle have emphasized markup adjustment in response to exchange rate changes. This paper suggests an alternative explanation based on the presence of both producer and local currency pricing. Using a dynamic general equilibrium model, the paper shows that a mix of producer and local currency pricing can explain the pass-through evidence even with a constant markup. The model can also explain the observed exchange rate and inflation variability as well as the fact that the regression and VAR estimates tend to be similar.
The Vehicle Currency Invoicing Of Trade And Exchange Rate Pass Through
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Author : Daniel Stephen Dorrow
language : en
Publisher:
Release Date : 1987
The Vehicle Currency Invoicing Of Trade And Exchange Rate Pass Through written by Daniel Stephen Dorrow and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1987 with categories.
Managing Currency Risk
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Author : Takatoshi Ito
language : en
Publisher: Edward Elgar Publishing
Release Date : 2018-07-27
Managing Currency Risk written by Takatoshi Ito and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-07-27 with Business & Economics categories.
This book demonstrates how exporters’ decisions regarding choice of invoice currency can be influenced by many factors including firm size, product competitiveness, intra/inter-firm trades, and the geography of export destination. The aim is to enhance our understanding of exporters’ behavior in terms of managing currency risk. It contains detailed research and insightful data focusing on Japanese exporters and shows how they face an important trade-off in choosing the invoice currency. If exports are invoiced in yen, then exchange rate fluctuations will pass through to retail prices ultimately affecting sales volumes. However, if they choose to invoice in the importer’s currency, then sales volumes are largely unchanged.
Patterns In Invoicing Currency In Global Trade
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Author : Emine Boz
language : en
Publisher:
Release Date : 2020-07-17
Patterns In Invoicing Currency In Global Trade written by Emine Boz and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-07-17 with categories.
This paper presents the most comprehensive and up-to-date panel data set of invoicing currencies in global trade. It provides data on the shares of exports and imports invoiced in US dollars, euros, and other currencies for more than 100 countries since 1990. The evidence from these data confirms findings from earlier research regarding the globally dominant role of the US dollar in invoicing - despite the comparatively smaller role of the US in global trade - and the overall stability of invoicing currency patterns. The evidence also points to several novel facts. First, both the US dollar and the euro have been increasingly used for invoicing even as the share of global trade accounted for by the US and the euro area has declined. Second, the euro is used as a vehicle currency in parts of Africa, and some European countries have seen significant shifts toward euro invoicing. Third, as suggested by the dominant currency paradigm, countries invoicing more in US dollars (euros) tend to experience greater US dollar (euro) exchange rate pass-through to their import prices; also, their trade volumes are more sensitive to fluctuations in these exchange rates.
Dominant Currency Paradigm A New Model For Small Open Economies
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Author : Camila Casas
language : en
Publisher: International Monetary Fund
Release Date : 2017-11-22
Dominant Currency Paradigm A New Model For Small Open Economies written by Camila Casas and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-11-22 with Business & Economics categories.
Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchange rate while exports respond weakly, if at all; (e) strengthening of the dominant currency relative to non-dominant ones can negatively impact global trade; (f) optimal monetary policy targets deviations from the law of one price arising from dominant currency fluctuations, in addition to the inflation and output gap. Using data from Colombia we document strong support for the dominant currency paradigm.
A Theory Of The Currency Denomination Of International Trade
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Author : Philippe Bacchetta
language : en
Publisher:
Release Date : 2002
A Theory Of The Currency Denomination Of International Trade written by Philippe Bacchetta and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Coinage, International categories.
Nominal rigidities due to menu costs have become a standard element in closed economy macroeconomic modeling. The 'New Open Economy Macroeconomics' literature has investigated the implications of nominal rigidities in an open economy context and found that the currency in which prices are set has significant implications for exchange rate pass-through to import prices, the level of trade and net capital flows, and optimal monetary and exchange rate policy. While the literature has exogenously assumed in which currencies goods are priced, in this paper we solve for the equilibrium optimal pricing strategies of firms. We find that the higher the market share of an exporting country in an industry, and the more differentiated its goods, the more likely its exporters will price in the exporter's currency. Country size and the cyclicality of real wages play a role as well, but are empirically less important. We also show that when a set of countries forms a monetary union, the new currency is likely to be used more extensively in trade than the sum of the currencies it replaces.
Dominant Currencies And External Adjustment
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2020-07-20
Dominant Currencies And External Adjustment written by Gustavo Adler and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-07-20 with Business & Economics categories.
The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.
Trade Invoicing Currency And First Stage Exchange Rate Pass Through
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Author : Christian Gillitzer
language : en
Publisher:
Release Date : 2016
Trade Invoicing Currency And First Stage Exchange Rate Pass Through written by Christian Gillitzer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.