Has the Euro affected the choice of invoicing currency?

Jenny Ligthart and Sebastian E. V. Werner

No 1414, Working Paper Series from European Central Bank

Abstract: We present a new approach to study empirically the effect of the introduction of the euro on the pattern of currency invoicing. Our approach uses a compositional multinomial logit model, in which currency choice is explained by both currency-specific and country-specific determinants. We use unique quarterly panel data on the invoicing of Norwegian imports from OECD countries for the 1996-2006 period. We find that eurozone countries have substantially increased their share of home currency invoicing after the introduction of the euro, whereas the home currency share of non-eurozone countries fell slightly. In addition, the euro as a vehicle currency has overtaken the role of the US dollar in Norwegian imports. The substantial rise in producer currency invoicing by eurozone countries is primarily caused by a drop in inflation volatility and can only to a small extent be explained by an unobserved euro effect. JEL Classification: F33, F41, F42, E31, C25

Keywords: compositional multinomial logit; euro; exchange rate risk; inflation volatility; invoicing currency; vehicle currencies (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-dcm, nep-eec, nep-mon and nep-opm
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Citations: View citations in EconPapers (7)

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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? (2011)
Working Paper: Has the Euro Affected the Choice of Invoicing Currency? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20121414

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