Imported inputs and invoicing currency choice: theory and evidence from UK transaction data
A significant proportion of international trade is in intermediate goods. This paper considers theoretically and empirically how exporters' dependence on imported inputs affects their choice of invoicing currency. The model predicts that exporters that depend more on foreign currency-denominate...
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| Format: | Article |
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Elsevier
2016
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| Online Access: | https://eprints.nottingham.ac.uk/31338/ |
| _version_ | 1848794180782915584 |
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| author | Chung, Wanyu |
| author_facet | Chung, Wanyu |
| author_sort | Chung, Wanyu |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | A significant proportion of international trade is in intermediate goods. This paper considers theoretically and empirically how exporters' dependence on imported inputs affects their choice of invoicing currency. The model predicts that exporters that depend more on foreign currency-denominated inputs are less likely to price in their home currency. I test this and other theoretical results using a novel dataset that covers UK trade transactions with non-EU countries. I find considerable support for the model's predictions. A 10 percentage point higher share of foreign currency-denominated inputs is associated with a 20 percentage point higher probability of pricing in the same foreign currency relative to the producer's currency. |
| first_indexed | 2025-11-14T19:12:06Z |
| format | Article |
| id | nottingham-31338 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:12:06Z |
| publishDate | 2016 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-313382020-05-04T17:42:56Z https://eprints.nottingham.ac.uk/31338/ Imported inputs and invoicing currency choice: theory and evidence from UK transaction data Chung, Wanyu A significant proportion of international trade is in intermediate goods. This paper considers theoretically and empirically how exporters' dependence on imported inputs affects their choice of invoicing currency. The model predicts that exporters that depend more on foreign currency-denominated inputs are less likely to price in their home currency. I test this and other theoretical results using a novel dataset that covers UK trade transactions with non-EU countries. I find considerable support for the model's predictions. A 10 percentage point higher share of foreign currency-denominated inputs is associated with a 20 percentage point higher probability of pricing in the same foreign currency relative to the producer's currency. Elsevier 2016-03-03 Article PeerReviewed Chung, Wanyu (2016) Imported inputs and invoicing currency choice: theory and evidence from UK transaction data. Journal of International Economics, 98 . pp. 237-250. ISSN 0022-1996 Currency of invoicing; Imported inputs; UK trade http://www.sciencedirect.com/science/article/pii/S0022199615001579 doi:10.1016/j.jinteco.2015.11.003 doi:10.1016/j.jinteco.2015.11.003 |
| spellingShingle | Currency of invoicing; Imported inputs; UK trade Chung, Wanyu Imported inputs and invoicing currency choice: theory and evidence from UK transaction data |
| title | Imported inputs and invoicing currency choice: theory and evidence from UK transaction data |
| title_full | Imported inputs and invoicing currency choice: theory and evidence from UK transaction data |
| title_fullStr | Imported inputs and invoicing currency choice: theory and evidence from UK transaction data |
| title_full_unstemmed | Imported inputs and invoicing currency choice: theory and evidence from UK transaction data |
| title_short | Imported inputs and invoicing currency choice: theory and evidence from UK transaction data |
| title_sort | imported inputs and invoicing currency choice: theory and evidence from uk transaction data |
| topic | Currency of invoicing; Imported inputs; UK trade |
| url | https://eprints.nottingham.ac.uk/31338/ https://eprints.nottingham.ac.uk/31338/ https://eprints.nottingham.ac.uk/31338/ |