Invoicing Currency, Exchange Rate Pass-through and Value-Added Trade: An Emerging Country Case

Hulya Saygili

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: We explore the role of invoicing currency and global production integration on exchange rate pass-through to import and export prices, using 3-digit product level data classified by end-use and 2-digit sector level data displaying varying integration to global value-added trade from an emerging country, Turkey. The results show that, overall, rates of exchange rate pass-through to export prices are higher than those to import prices. The rare of pass-through is significantly higher for local currency-priced goods. The pass-through to the US dollar and euro-priced goods depends on the type of products traded and value-added trade. For consumption and capital goods, pass-through rates are significant and relatively high when they are priced in the US dollars. For intermediate goods the pass-through to euro-priced goods are higher than those to the US dollar-priced goods. In addition, sectors displaying a low or high association with global value chains tend to have a higher exchange rate pass-through than those placing in the middle range and the rate is slightly higher for sectors having lower global linkage.

Keywords: Exchange rate pass-through; Currency of invoicing; Imported input; Value-added trade (search for similar items in EconPapers)
JEL-codes: F1 F3 F4 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ara, nep-int, nep-mon and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1917

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