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From Dominant to Producer Currency Pricing: Dynamics of Chilean Exports

Author

Listed:
  • José De Gregorio
  • Pablo García
  • Emiliano E. Luttini
  • Marco Rojas

Abstract

We revisit a central question for international macroeconomics: the response of export prices and quantities to movements in the exchange rate (ER). We use granular export data for Chile and study how the effects of ER movements vary over time with the currency of invoicing and the destination of exports. For prices, we find that the short-run effects of bilateral ER movements vanish when controlling for U.S. dollar ER, which supports dominant currency pricing. However, over longer horizons a more significant role is played by bilateral ER movements, in line with the predictions of producer currency pricing. These dynamics do not depend on the invoicing currency. The results we find for quantities support the view that bilateral exchange rate movements contribute to macroeconomic adjustment through export volumes over the medium term.

Suggested Citation

  • José De Gregorio & Pablo García & Emiliano E. Luttini & Marco Rojas, 2024. "From Dominant to Producer Currency Pricing: Dynamics of Chilean Exports," NBER Working Papers 32175, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32175
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    Cited by:

    1. Nuwat Nookhwun & Jettawat Pattararangrong & Phurichai Rungcharoenkitkul, 2025. "Exchange Rate Effects on Firm Performance: A NICER Approach," BIS Working Papers 1266, Bank for International Settlements.
    2. Zhang, Wenqian & Wei, Hao, 2025. "The impact of RMB exchange rate changes on the prices of imported products by Chinese firms," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 464-478.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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