Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through

Emine Boz, Gita Gopinath and Mikkel Plagborg-Moller

AEA Papers and Proceedings, 2019, vol. 109, 527-32

Abstract: We show empirically that the variation across country pairs in exchange rate pass-through and trade elasticity is meaningfully explained by the dollar's dominance as invoicing currency. We use a hierarchical Bayesian approach to directly and flexibly model pass-through heterogeneity conditional on the invoicing currency share. We estimate that the importer's country-level dollar invoicing share explains 15 percent of the overall variance across trading pairs in dollar exchange rate pass-through into bilateral prices.

JEL-codes: E42 F31 F33 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/pandp.20191009
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Citations: View citations in EconPapers (11)

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