Micro, Macro, and Strategic Forces in International Trade Invoicing

Linda Goldberg and Cédric Tille

No 7534, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The use of different currencies in the invoicing of international trade transactions plays a major role in the international transmission of economic fluctuations. Existing studies argue that an exporter?s invoicing choice reflects structural aspects of her industry, such as market share and the price sensitivity of demand, the hedging of marginal costs, due for instance to the use of imported inputs, and macroeconomic volatility. We use a new highly disaggregated dataset to assess the roles of the various invoicing determinants. We find support for the factors identified in the literature, and document a new feature, in the form of a link between shipments size and invoicing. Specifically, larger transactions are more likely to be invoiced in the importer?s currency. We offer a potential theoretical explanation for the empirical link between transaction size and invoicing by allowing invoicing to be set through a bargaining between exporters and importers, a feature that is absent from existing models despite its empirical relevance.

Keywords: International trade; Invoicing currency; Pass-through; Vehicle currency (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2009-11
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Citations: View citations in EconPapers (47)

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Related works:
Working Paper: Micro, Macro, and Strategic Forces in International Trade Invoicing (2010)
Working Paper: Micro, macro, and strategic forces in international trade invoicing (2009)
Working Paper: Micro, Macro, and Strategic Forces in International Trade Invoicing (2009)
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