Invoicing and the dynamics of pricing-to-market: Evidence from UK export prices around the Brexit referendum

• 成果类型: Article
• 署名作者: Corsetti, Giancarlo; Crowley, Meredith; Han, Lu
• 署名单位: University of Cambridge; Centre for Economic Policy Research - UK; University of Liverpool
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2022.103570
• 发表日期: 2022
• 关键词: Exchange rate; Pass through; Markup elasticity; Vehicle currency; Dominant currency; Firm level data

摘要

We provide micro-econometric evidence that, following the large and persistent sterling depreciation after the Brexit referendum, on impact, exchange rate pass-through (ERPT) was complete for transactions invoiced in producer currency and low for sales invoiced either in a vehicle or in the destination market currency. Yet these differences strikingly narrowed within six quarters. A weaker currency did not translate into a persistent gain in price competitiveness for UK exports. At a granular level we find that UK exporters invoice in multiple currencies- even when shipping a product to the same destination-and switch currencies over time. Remarkably, we fail to detect significant changes in the relative shares of invoicing currencies in response to the Brexit shock. Last but not least, we find that UK firms price-to-market, i.e., adjust markups to bilateral exchange rate and CPI movements, only when they invoice sales in the destination-market currency. (c) 2022 Elsevier B.V. All rights reserved.