Exchange Rate Pass-Through, Currency of Invoicing and Market Share

Arbeitspapier

This paper investigates the impact of market structure on the joint determination of exchange rate pass-through and currency of invoicing in international trade. A novel feature of the study is the focus on market share of firms on both sides of the market - that is, exporting firms and importing firms. A model of monopolistic competition with heterogeneous firms has the following set of predictions: a) exchange rate pass-through should be non-monotonic and U-shaped in the market share of exporting firms, but monotonically declining in the market share of importers; b) exchange rate pass-through should be lower, the higher is local currency invoicing of imports; and c) producer currency invoicing should be related non-monotonically and U-shaped to exporter market share, and monotonically declining in importing firms' market share. We test these predictions using a new and large micro data set covering the universe of Canadian imports over a six-year period. The data strongly support all three predictions.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bank of Canada Working Paper ; No. 2015-31

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: Exchange rates ; Inflation and prices ; Market structure and pricing

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Devereux, Michael B. ; Dong, Wei ; Tomlin, Ben
• Ereignis: Veröffentlichung
• (wer): Bank of Canada
• (wo): Ottawa
• (wann): 2015

Weitere Informationen

• DOI: doi:10.34989/swp-2015-31
• Handle: http://hdl.handle.net/10419/123771
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ