Micro, Macro, and Strategic Forces in International Trade Invoicing

Linda Goldberg and Cédric Tille

No 15470, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2009-11
Note: IFM ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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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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