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Currency Invoicing of U.S. Imports

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  • Shabtai Donnenfeld

    ()
    (York University, Canada)

  • Alfred A. Haug

    ()
    (York University, Canada)

Abstract

This paper provides an explanation for the choice of currency of invoice of exports to the U.S. We find an empirical relationship between the riskiness of the exchange rate and the fraction of imports invoiced in the importer¡¯s currency, the exporter¡¯s currency, and a third country currency. The higher the volatility of the exchange rate, the larger is the fraction of imports invoiced in the importer¡¯s currency. Consequently, the fraction of invoicing in the exporter¡¯s or a third country currency is inversely related to the volatility of the exchange rate.

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File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/Donnenfeld_Haug_usa.pdf
File Function: Revised version, 2002
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Bibliographic Info

Paper provided by York University, Department of Economics in its series Working Papers with number 2002_11.

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Length: 22 pages
Date of creation: Nov 2001
Date of revision: Apr 2002
Handle: RePEc:yca:wpaper:2002_11

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  1. Baillie, Richard T & Bollerslev, Tim, 2002. "The Message in Daily Exchange Rates: A Conditional-Variance Tale," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 60-68, January.
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Cited by:
  1. Takatoshi Ito & Satoshi Koibuchi & Kiyotaka Sato & Junko Shimizu, 2010. "Why has the yen failed to become a dominant invoicing currency in Asia? A firm-level analysis of Japanese Exporters' invoicing behavior," NBER Working Papers 16231, National Bureau of Economic Research, Inc.
  2. Jenny Ligthart & Sebastian E. V. Werner, 2010. "Has the Euro Affected the Choice of Invoicing Currency?," CESifo Working Paper Series 3058, CESifo Group Munich.
  3. Linda S. Goldberg & Cédric Tille, 2006. "The International Role of the Dollar and Trade Balance Adjustment," NBER Working Papers 12495, National Bureau of Economic Research, Inc.
  4. Linda S. Goldberg & Cedric Tille, 2005. "Vehicle Currency Use in International Trade," NBER Working Papers 11127, National Bureau of Economic Research, Inc.
  5. Linda Goldberg & Cedric Tille, 2006. "The internationalization of the dollar and trade balance adjustment," Staff Reports 255, Federal Reserve Bank of New York.
  6. ITO Takatoshi & KOIBUCHI Satoshi & SATO Kiyotaka & SHIMIZU Junko, 2010. "Determinants of Currency Invoicing in Japanese Exports: A firm-level analysis," Discussion papers 10034, Research Institute of Economy, Trade and Industry (RIETI).
  7. Ke Pang & Yao Tang, 2014. "Vertical Trade, Exchange Rate Pass-Through, and the Exchange Rate Regime," Open Economies Review, Springer, vol. 25(3), pages 477-520, July.

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