Trade Invoicing Currency And First Stage Exchange Rate Pass Through
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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.
Trade Invoicing Currencies And Exchange Rate Pass Through
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Author : Felipe Benguria
language : en
Publisher:
Release Date : 2022
Trade Invoicing Currencies And Exchange Rate Pass Through written by Felipe Benguria and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
A recent literature emphasizes the prominence of dominant currencies in international trade invoicing, and the role of invoice currencies in the transmission of exchange rate shocks. In this paper, we examine the introduction of the euro as a once-in-a-century natural experiment which induced a substantial shifting in invoice currencies, allowing us to test existing theories. We use unique data on the invoice currencies of the universe of export and import transactions of a small open economy trading with the Eurozone over the period 1997-2010. Before the euro, exports to the Eurozone were dominated by the US dollar, and euro legacy currencies were rarely used. The introduction of the euro led a substantial number of firms to swiftly switch their invoice currencies to euros, which eventually accounted for 40 % of all transactions. We first study the determinants of the adoption of the euro in exports to the Eurozone, finding a key role for strategic complementarities and for the invoice currency of imported inputs. In the core of our analysis, we show how firms switching from dollars to euros faced a radical transformation of their exchange rate pass-through, in line with recent theories. While the literature has studied trade invoice currencies in settings in which these are very persistent firm-level choices, our findings validate the conjecture that large--scale policy changes can lead to changes in these choices, and simultaneous changes in exchange rate pass-through.
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.
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.
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.
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.
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.
Export Performance Invoice Currency And Heterogeneous Exchange Rate Pass Through
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Author : Richard Fabling
language : en
Publisher:
Release Date : 2015
Export Performance Invoice Currency And Heterogeneous Exchange Rate Pass Through written by Richard Fabling 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.
Using comprehensive, shipment-level merchandise trade data for a small, open economy, we examine heterogeneity in exporters' exchange rate pass-through (ERPT) behaviour. We draw together two recent studies of ERPT, linking invoice currency decisions and firm performance to heterogeneity in ERPT. Like these studies, we find that the short-run reaction of export unit values to exchange rate fluctuations is significantly related to both invoice currency choice and exporter characteristics when these are analysed separately. However, we then show that when the two factors are jointly accounted for, the role of exporter characteristics largely disappears. That is, some firm types are more inclined to invoice in the producer currency, while others use either the local or a vehicle currency. In the short run, this translates into differences in exchange rate pass-through because of price rigidity in the invoice currency. Firm characteristics do not have an independent impact on pass-through beyond their effect on currency composition. Differences across invoice currencies diminish over time, but do not disappear, as prices adjust to reflect bilateral exchange rate movements.
Exchange Rate Volatility And Trade Flows Some New Evidence
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 2004-05-19
Exchange Rate Volatility And Trade Flows Some New Evidence written by International Monetary Fund 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 2004-05-19 with Business & Economics categories.
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The Emergence Of The Euro As An International Currency
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Author : George Alogoskoufis
language : en
Publisher:
Release Date : 1997
The Emergence Of The Euro As An International Currency written by George Alogoskoufis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Coinage, International categories.
The European Union will enter Stage Three of Economic and Monetary Union (EMU) in 1999. The development of euro financial markets and thickness externalities in the use of the euro as a means of payment will be the major factors determining the importance of the euro as an international currency. As euro securities markets become deeper and more liquid and transactions costs fall, euro assets will become more attractive, and the use of the euro as a vehicle currency will expand; the two effects interact, as we demonstrate. We use a three-region world model as a framework for alternative steady-state scenarios. With forex and securities market data, we assess the plausibility of those scenarios and the implications for economic efficiency (welfare). We find that the euro may take on some of the current roles of the dollar. The welfare analysis reveals potential quantitatively significant benefits for the euro area, at the cost of the US and (to a lesser degree) Japan.