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From dominant to producer currency pricing: Dynamics of Chilean exports

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  • De Gregorio, José
  • García, Pablo
  • Luttini, Emiliano
  • Rojas, Marco

Abstract

We revisit a central question for international macroeconomics: the response of export prices and quantities to movements in the exchange rate (ER). We use granular export data for Chile and study how the effects of ER movements vary over time with the currency of invoicing and the destination of exports. For prices, we find that the short-run effects of bilateral ER movements vanish when controlling for U.S. dollar ER, which supports dominant currency pricing. However, over longer horizons a more significant role is played by bilateral ER movements, in line with the predictions of producer currency pricing. These dynamics do not depend on the invoicing currency. The results we find for quantities support the view that bilateral ER movements contribute to macroeconomic adjustment through export volumes over the medium term.

Suggested Citation

  • De Gregorio, José & García, Pablo & Luttini, Emiliano & Rojas, Marco, 2024. "From dominant to producer currency pricing: Dynamics of Chilean exports," Journal of International Economics, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:inecon:v:149:y:2024:i:c:s0022199624000618
    DOI: 10.1016/j.jinteco.2024.103934
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    More about this item

    Keywords

    Currency of invoicing; Emerging markets; Dominant currency pricing; Producer currency pricing;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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