Dominant Currency Paradigm

• 成果类型: Article
• 署名作者: Gopinath, Gita; Boz, Emine; Casas, Camila; Diez, Federico J.; Gourinchas, Pierre-Olivier; Plagborg-Moller, Mikkel
• 署名单位: Harvard University; International Monetary Fund; Banco de la Republica Colombia; University of California System; University of California Berkeley; Princeton University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20171201
• 发表日期: 2020
• 页码: 677-719
• 关键词: exchange-rate dynamics; monetary-policy; TRADE; adjustment; prices; rates; facts

摘要

We propose a dominant currency paradigm with three key features: dominant currency pricing, pricing complementarities, and imported inputs in production. We test this paradigm using a new dataset of bilateral price and volume indices for more than 2,500 country pairs that covers 91 percent of world trade, as well as detailed firm-product-country data for Colombian exports and imports. In strong support of the paradigm we find that (i) noncommodities terms-of-trade are uncorrelated with exchange rates; (ii) the dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions, and this effect is increasing in the share of imports invoiced in dollars; (iii) US import volumes are significantly less sensitive to bilateral exchange rates, compared to other countries' imports; (iv) a 1 percent US dollar appreciation against all other currencies predicts a 0.6 percent decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. We characterize the transmission of, and spillovers from, monetary policy shocks in this environment.