IDEAS home Printed from https://ideas.repec.org/p/bdi/opques/qef_473_18.html
   My bibliography  Save this paper

Invoicing currency and exchange rate pass-through: evidence from firm level analysis of Italian firms

Author

Listed:
  • Alessandro Borin

    () (Bank of Italy)

  • Andrea Linarello

    () (Bank of Italy)

  • Elena Mattevi

    () (Bank of Italy)

  • Giordano Zevi

    () (Bank of Italy)

Abstract

The paper analyzes how the choice of the invoicing currency used in international transactions by the Italian companies influences the transmission of exchange rates shocks to their price strategies and business activity. Companies invoicing in euros tend to not adjusting the prices of exported goods; in this case the exchange rate fluctuations are transmitted almost entirely to the prices of their goods in the destination countries, also inducing a large response of the exported volumes. On the other hand, companies that invoice in local currency transmit weakly the exchange rate fluctuations to prices in destination markets and therefore attenuate the impacts on exports volumes. Fixing prices in foreign currency is more frequent among larger and more productive companies, which tend to transfer the exchange rate shocks mostly on unit margins. Overall, despite the different transmission channels, the effect of exchange rate fluctuations on foreign turnover in euros, is quite similar among the different pricing strategies.

Suggested Citation

  • Alessandro Borin & Andrea Linarello & Elena Mattevi & Giordano Zevi, 2018. "Invoicing currency and exchange rate pass-through: evidence from firm level analysis of Italian firms," Questioni di Economia e Finanza (Occasional Papers) 473, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_473_18
    as

    Download full text from publisher

    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2018-0473/QEF_473_18.pdf
    Download Restriction: no

    More about this item

    Keywords

    invoicing currency; exchange rate pass-through;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdi:opques:qef_473_18. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/bdigvit.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.