Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through


Boz, Emine, Gita Gopinath, and Mikkel Plagborg-Møller. 2019. “Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through.” AEA Papers and Proceedings 109: 527-532.

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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.


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Last updated on 08/01/2019