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Has the Euro Affected the Choice of Invoicing Currency?

  • Jenny E. Ligthart


  • Sebastian E. V. Werner

We present a new approach to study empirically the effect of the introduction of the euro on the pattern of currency invoicing. Our approach uses a compositional multi- nomial logit model, in which currency choice is explained by both currency-specific and country-specific determinants. We use unique quarterly panel data of Norwegian imports from OECD countries for the 1996-2006 period. We find that eurozone countries have substantially increased their share of home currency invoicing after the introduction of the euro, whereas the home currency share of non-eurozone countries fell. In addition, the euro as a vehicle currency has overtaken the role of the US dollar in Norwegian imports. The substantial rise in producer currency invoicing by eurozone countries is primarily caused by a drop in inflation volatility and can only to a small extent be explained by an unobserved euro effect.

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Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2011-03.

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Length: 42 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:een:camaaa:2011-03
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