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Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through

Author(s): Boz, Emine; Gopinath, Gita; Plagborg-Moller, Mikkel

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Abstract: We show empirically that the variation across country pairs in exchange rate pass-through and trade elasticity is meaningfully explained by the dollar's dominance as invoicing currency. We use a hierarchical Bayesian approach to directly and flexibly model pass-through heterogeneity conditional on the invoicing currency share. We estimate that the importer's country-level dollar invoicing share explains 15 percent of the overall variance across trading pairs in dollar exchange rate pass-through into bilateral prices.
Publication Date: May-2019
Citation: Boz, Emine, Gopinath, Gita, Plagborg-Moller, Mikkel. (2019). Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through. AEA PAPERS AND PROCEEDINGS, 109 (527 - 532. doi:10.1257/pandp.20191009
DOI: doi:10.1257/pandp.20191009
ISSN: 2574-0768
EISSN: 2574-0776
Pages: 527 - 532
Type of Material: Journal Article
Journal/Proceeding Title: AEA PAPERS AND PROCEEDINGS
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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