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Bilateral Invoicing Currency, Value-Added in Imports, and Exchange Rate Pass-Through

Author

Listed:
  • Fabien Rondeau

    (Univ Rennes, CNRS, CREM – UMR6211, F-35000 Rennes France)

  • Yushi Yoshida

    (Shiga Unversity)

Abstract

The theoretical model a la Amiti, Itskhoki, and Konings (2014, AER) suggests that the inclusion of exporters’ market share and import intensity in the exchange rate pass-through regression is sufficient to reflect the underlying deep parameters. We suggest using value-added by importing and other countries and invoicing currency ratio as proxies for the import intensity measure. By examining 33 exporting countries and 13 importing countries for 18 industries between 1995 and 2018, our results show that exchange rate pass-through decreases for industries with a higher contribution of the other country’s value-added. Moreover, we find that a higher US dollar invoicing ratio decreases the exchange rate pass-through.

Suggested Citation

  • Fabien Rondeau & Yushi Yoshida, 2024. "Bilateral Invoicing Currency, Value-Added in Imports, and Exchange Rate Pass-Through," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-09, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:2024-09
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    References listed on IDEAS

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    1. Grassman, Sven, 1973. "A fundamental symmetry in international payment patterns," Journal of International Economics, Elsevier, vol. 3(2), pages 105-116, May.
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    More about this item

    Keywords

    Exchange Rate Pass-through; Global Value Chains; Invoicing Currency; Market Share; Value-Added by Importers.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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