Dollar and Exports

Valentina Bruno and Hyun Song Shin

No 16311, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The strength of the US dollar has attributes of a barometer of dollar credit conditions, whereby a stronger dollar is associated with tighter dollar credit conditions. Using finely disaggregated data on export shipments, we examine how dollar strength impacts exports through the availability of dollar financing for working capital - an issue of importance due to the greater working capital needs for exports arising from longer supply chains and greater delay in receiving payments. We find that exporters who are reliant on dollar-funded bank credit suffer a decline in exports, and that this decline is larger than any decline in domestic sales. Our findings shed light on the broad dollar index as a global financial factor with real effects on the economy.

Keywords: Us dollar; Financial channel of exchange rates; Global financial conditions (search for similar items in EconPapers)
JEL-codes: F32 F34 F42 G15 (search for similar items in EconPapers)
Date: 2021-06
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Journal Article: Dollar and Exports (2023)
Working Paper: Dollar and Exports (2019)
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