Imported inputs and invoicing currency choice: Theory and evidence from UK transaction data

• 成果类型: Article
• 署名作者: Chung, Wanyu
• 署名单位: University of Nottingham
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2015.11.003
• 发表日期: 2016
• 页码: 237-250
• 关键词: Currency of invoicing; imported inputs; UK trade

摘要

A significant proportion of international trade is in intermediate goods. This paper considers theoretically and empirically how exporters' dependence on imported inputs affects their choice of invoicing currency. The model predicts that exporters that depend more on foreign currency-denominated inputs are less likely to price in their home currency. I test this and other theoretical results using a novel dataset that covers UK trade transactions with non-EU countries. I find considerable support for the model's predictions. A 10 percentage point higher share of foreign currency-denominated inputs is associated with a 20 percentage point higher probability of pricing in the same foreign currency relative to the producer's currency. (C) 2015 Elsevier B.V. All rights reserved.