Why has the yen failed to become a dominant invoicing currency in Asia? A firm-level analysis of Japanese Exporters' invoicing behavior
AbstractIt has been a well-known puzzle why the yen has not been used more in trade invoicing among Japanese exporters. Despite the yen’s status as an only fully convertible currency in Asia, two patterns stand out as puzzling features of an excessively small share of yen invoicing: First, a strong tendency of Japanese exporters to choose importer's currency in their exports to advanced countries, and second, the prevalence of US dollar invoicing in Japanese exports to East Asia even though Japanese firms have built a regional production network in the last two decades. New possible determinants of currency invoicing at a firm-level are found through interviews with Japanese representative exporting firms. Invoicing behavior is examined by probit estimation using the unique data set on the firms' currency invoicing choice by destination. Our novel findings suggest that a surprisingly low share of yen invoicing among Japanese exports even in the 2000s can be attributable to (1) a scale-economy in concentrating currency risk at the headquarter as intra-firm trades with overseas operations of Japanese firms grew; and (2) the production/trade structure of Japanese electronics companies in Asia in which final products tend to be exported to the United States or Europe.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16231.
Date of creation: Jul 2010
Date of revision:
Note: IFM ME
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yusuru Ozeki & George S. Tavlas, 1992. "The Internationalization of Currencies: An Appraisal of the Japanese Yen," IMF Occasional Papers 90, International Monetary Fund.
- Donnenfeld, Shabtai & Zilcha, Itzhak, 1991.
"Pricing of Exports and Exchange Rate Uncertainty,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 1009-22, November.
- Sven W. Arndt & J. David Richardson, 1988. "Real-Financial Linkages Among Open Economies," NBER Working Papers 2230, National Bureau of Economic Research, Inc.
- Ligthart, J.E. & Da Silva, J., 2007. "Currency Invoicing in International Trade: A Panel Data Approach," Discussion Paper 2007-25, Tilburg University, Center for Economic Research.
- Linda S. Goldberg & Cedric Tille, 2005.
"Vehicle currency use in international trade,"
200, Federal Reserve Bank of New York.
- Linda S. Goldberg & Cédric Tille, 2009.
"Micro, macro, and strategic forces in international trade invoicing,"
405, Federal Reserve Bank of New York.
- Linda S. Goldberg & Cédric Tille, 2009. "Micro, Macro, and Strategic Forces in International Trade Invoicing," NBER Working Papers 15470, National Bureau of Economic Research, Inc.
- Goldberg, Linda S. & Tille, Cédric, 2009. "Micro, Macro, and Strategic Forces in International Trade Invoicing," CEPR Discussion Papers 7534, C.E.P.R. Discussion Papers.
- Linda S. Goldberg & Cedric Tille, 2010. "Micro, Macro, and Strategic Forces in International Trade Invoicing," Working Papers 082010, Hong Kong Institute for Monetary Research.
- John F. O. Bilson & Richard C. Marston, 1984. "Exchange Rate Theory and Practice," NBER Books, National Bureau of Economic Research, Inc, number bils84-1.
- Shabtai Donnenfeld & Alfred A. Haug, 2001.
"Currency Invoicing of U.S. Imports,"
2002_11, York University, Department of Economics, revised Apr 2002.
- Marcus Noland, 1995. "China and the International Economic System," Working Paper Series WP95-6, Peterson Institute for International Economics.
- Friberg, Richard, 1998. "In which currency should exporters set their prices?," Journal of International Economics, Elsevier, vol. 45(1), pages 59-76, June.
- Yushi Yoshida & Shinji Takagi, 1999. "Exchange Rate Movements and Tradable Goods Prices in East Asia - An Analysis Based on Japanese Customs Data, 1988-98," IMF Working Papers 99/31, International Monetary Fund.
- Fukuda Shin-ichi & Cong Ji, 1994.
"On the Choice of Invoice Currency by Japanese Exporters: The PTM Approach,"
Journal of the Japanese and International Economies,
Elsevier, vol. 8(4), pages 511-529, December.
- Shin-ichi Fukuda & Ji Cong, 1994. "On the Choice of Invoice Currency by Japanese Exporters: The PTM Approach," Discussion Paper Series a289, Institute of Economic Research, Hitotsubashi University.
- Shabtai Donnenfeld & Alfred Haug, 2003. "Currency Invoicing in International Trade: an Empirical Investigation," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 332-345, 05.
- George S. Tavlas, 1997. "The International Use of the US Dollar: An Optimum Currency Area Perspective," The World Economy, Wiley Blackwell, vol. 20(6), pages 709-747, 09.
- Friberg, Richard & Wilander, Fredrik, 2008. "The currency denomination of exports -- A questionnaire study," Journal of International Economics, Elsevier, vol. 75(1), pages 54-69, May.
- Johnson, Martin & Pick, Daniel, 1997. "Currency Quandary: The Choice of Invoicing Currency under Exchange-Rate Uncertainty," Review of International Economics, Wiley Blackwell, vol. 5(1), pages 118-28, February.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Japanâ??s rising yen and the decline of the US dollar
by Masaya Sakuragawa in East Asia Forum on 2011-10-01 12:00:26
- Jenny E. Ligthart & Sebastian E. V. Werner, 2011.
"Has the Euro Affected the Choice of Invoicing Currency?,"
CAMA Working Papers
2011-03, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Ligthart, Jenny E. & Werner, Sebastian E.V., 2012. "Has the euro affected the choice of invoicing currency?," Journal of International Money and Finance, Elsevier, vol. 31(6), pages 1551-1573.
- Ligthart, Jenny E. & Werner, Sebastian E. V., 2012. "Has the Euro affected the choice of invoicing currency?," Working Paper Series 1414, European Central Bank.
- Ligthart, J.E. & Werner, S.E.V., 2010. "Has the Euro Affected the Choice of Invoicing Currency?," Discussion Paper 2010-48, Tilburg University, Center for Economic Research.
- Jenny Ligthart & Sebastian E. V. Werner, 2010. "Has the Euro Affected the Choice of Invoicing Currency?," CESifo Working Paper Series 3058, CESifo Group Munich.
- Linda Goldberg, 2011. "The international role of the dollar: Does it matter if this changes?," Staff Reports 522, Federal Reserve Bank of New York.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.