Has the Euro Affected the Choice of Invoicing Currency?

Jenny E. Ligthart and S.E.V. Werner
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S.E.V. Werner: Tilburg University, Center for Economic Research

No 2010-48, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: We present a new approach to study empirically the effect of the introduction of the euro on currency invoicing. Our approach uses a compositional multinomial logit model, in which currency choice depends on the characteristics of both the currency and the country. We use unique quarterly panel data of Norwegian imports from OECD countries for the 1996{2006 period. One of the key findings is that the eurozone countries in trade with Norway have substantially increased their share of home currency invoicing after the introduction of the euro. In addition, the euro as a vehicle currency has overtaken the role of the US dollar in Norwegian imports. The econometric analysis shows a significant effect of euro introduction above and beyond the determinants of currency invoicing (i.e., ination rate, ination volatility, foreign exchange market size, and product composition). However, the rise in producer currency invoicing by eurozone countries is primarily caused by a drop in ination volatility.

JEL-codes: F14 F15 F31 F33 F36 E31 C25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-ifn, nep-int, nep-mon and nep-opm
Date: 2010
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Related works:
Journal Article: Has the euro affected the choice of invoicing currency? (2012)
Working Paper: Has the Euro affected the choice of invoicing currency? (2012)
Working Paper: Has the Euro Affected the Choice of Invoicing Currency? (2011)
Working Paper: Has the Euro Affected the Choice of Invoicing Currency? (2010)
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