Dominant Currencies: How Firms Choose Currency Invoicing and Why it Matters*

• 成果类型: Article
• 署名作者: Amiti, Mary; Itskhoki, Oleg; Konings, Jozef
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - New York; University of California System; University of California Los Angeles; Nazarbayev University; KU Leuven; University of Liverpool
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjac004
• 发表日期: 2022
• 页码: 1435-1493
• 关键词: exchange-rate dynamics; rate pass-through; INTERNATIONAL-TRADE; exporters; prices; MODEL; CHOICE; rates; stabilization; Importers

摘要

We analyze how firms choose the currency of invoicing and the implications of this choice for exchange rate pass-through into export prices and quantities. Using a new data set for Belgian firms, we find currency invoicing to be an active firm-level decision, shaped by the firm's size, exposure to imported inputs, and the currency choices of its competitors. Our results show that a firm's currency choice, in turn, has a direct causal effect on the exchange rate pass-through into prices and quantities. Moreover, the differential price response of similar firms that invoice in different currencies is large, persists beyond a one-year horizon, and gradually wanes in the long run. This results in allocative expenditure-switching effects on export quantities, which build up over time, suggesting a role for quantity adjustment frictions in addition to price stickiness. Our findings shed light on the mechanisms that make or break a dominant currency and the consequences it has for the international transmission of shocks.