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Dollar and Exports

Author

Listed:
  • Bruno, Valentina
  • Shin, Hyun Song

Abstract

The strength of the US dollar has attributes of a barometer of dollar credit conditions, whereby a stronger dollar is associated with tighter dollar credit conditions. Using finely disaggregated data on export shipments, we examine how dollar strength impacts exports through the availability of dollar financing for working capital - an issue of importance due to the greater working capital needs for exports arising from longer supply chains and greater delay in receiving payments. We find that exporters who are reliant on dollar-funded bank credit suffer a decline in exports, and that this decline is larger than any decline in domestic sales. Our findings shed light on the broad dollar index as a global financial factor with real effects on the economy.

Suggested Citation

  • Bruno, Valentina & Shin, Hyun Song, 2021. "Dollar and Exports," CEPR Discussion Papers 16311, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16311
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    File URL: https://cepr.org/publications/DP16311
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    Keywords

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    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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