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Dollar invoicing, exchange rates and international trade

In: The price, real and financial effects of exchange rates

Author

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  • David Cook

    (Hong Kong University of Science and technology)

  • Nikhil Patel

    (Bank for International Settlements)

Abstract

This paper studies the role of exchange rates and dollar invoicing in driving the dynamics of international trade flows. It uses a granular decomposition of trade flows at the bilateral level to highlight a bifurcation, whereby in response to a rise in US interest rates, final goods trade between non-US countries, as well as trade that is more regionally oriented, declines by more than does trade that is global value chainoriented. These results highlight an important role played by global value chains in mitigating the negative impact of external shocks.

Suggested Citation

  • David Cook & Nikhil Patel, 2018. "Dollar invoicing, exchange rates and international trade," BIS Papers chapters, in: Bank for International Settlements (ed.), The price, real and financial effects of exchange rates, volume 96, pages 108-121, Bank for International Settlements.
    • Handle: RePEc:bis:bisbpc:96-11
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    File URL: https://www.bis.org/publ/bppdf/bispap96_j_rh.pdf
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    References listed on IDEAS

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    5. Gita Gopinath & Emine Boz & Camila Casas & Federico J. Díez & Pierre-Olivier Gourinchas & Mikkel Plagborg-Møller, 2020. "Dominant Currency Paradigm," American Economic Review, American Economic Association, vol. 110(3), pages 677-719, March.
    6. Betts, Caroline & Devereux, Michael B., 1996. "The exchange rate in a model of pricing-to-market," European Economic Review, Elsevier, vol. 40(3-5), pages 1007-1021, April.
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    8. McKinnon, Ronald I., 2004. "The East Asian dollar standard," China Economic Review, Elsevier, vol. 15(3), pages 325-330.
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    Cited by:

    1. Tran, Thi Anh-Dao & Phi, Minh Hong & Thai, Long, 2020. "Global value chains and the missing link between exchange rates and export diversification," International Economics, Elsevier, vol. 164(C), pages 194-205.
    2. Thi Anh-Dao Tran & Minh Hong Phi & Long Thai, 2020. "Global value chains and the missing link between exchange rates and export diversification," Post-Print halshs-02972341, HAL.

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