Euro usage in international trade amidst threats to multilateralism: evidence from Malawian imports

Angella Montfaucon

Empirica, 2022, vol. 49, issue 2, No 9, 485-507

Abstract: Abstract The European Union (EU) is both a supporter and a symbol of multilateralism in international trade. The growth in the international role of the euro may ease the spillover concerns that a dollar dominated global economy brings. This paper assesses the effect of possible “threats” to multilateralism on the euro as a currency of invoicing in trade, using tariffs and EU (and euro area) membership as symbols of that multilateralism. Utilizing rarely available information on import duty and currency of invoicing from transaction-level data of Malawian imports, we estimate effects on the share of the euro in producer and vehicle currency pricing in EU and non-EU products. Our approach uses a fractional response model and a multinomial logit model. The results reveal that euro invoicing by eurozone countries is decreased by higher tariffs in the destination country, and increased by higher market share and a longer stay in the currency union. On the other hand, non-EU countries use the euro as a vehicle currency when faced with volatility and this invoicing share is higher with higher membership size of the EU. Thus, protectionist trade policies and decreases in country membership of the EU, are likely stifle internationalization of the euro.

Keywords: Euro; Euro area; Invoicing currency; Tariff; Market share; European Union (search for similar items in EconPapers)
JEL-codes: C2 F1 F3 F4 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10663-021-09523-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:empiri:v:49:y:2022:i:2:d:10.1007_s10663-021-09523-8

Ordering information: This journal article can be ordered from
http://www.springer. ... ration/journal/10663

DOI: 10.1007/s10663-021-09523-8

Access Statistics for this article

Empirica is currently edited by Fritz Breuss and Fritz Breuss

More articles in Empirica from Springer, Austrian Institute for Economic Research, Austrian Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().