The Effect of the Dollar on Trade Prices

26 Pages Posted: 3 Dec 2020

See all articles by Sai Ma

Sai Ma

Board of Governors of the Federal Reserve System

Tim Schmidt-Eisenlohr

Board of Governors of the Federal Reserve System

Shaojun Zhang

The Ohio State University

Multiple version iconThere are 2 versions of this paper

Date Written: 2020

Abstract

This paper provides evidence on the effect of the dollar exchange rate on international trade prices, employing a new instrument for the U.S. dollar based on U.S. domestic housing activity (Ma and Zhang (2019)). In line with the dominant currency paradigm (Gopinath et al. (2020)), when instrumenting the dollar, we find evidence for a perfect pass-through of the dollar exchange rate to import prices that are invoiced in dollars.

Keywords: dominant currency, dollar invoicing, international trade

JEL Classification: F140, f310, G150

Suggested Citation

Ma, Sai and Schmidt-Eisenlohr, Tim and Zhang, Shaojun, The Effect of the Dollar on Trade Prices (2020). CESifo Working Paper No. 8727, Available at SSRN: https://ssrn.com/abstract=3741800 or http://dx.doi.org/10.2139/ssrn.3741800

Sai Ma (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Washington, DC 20551
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HOME PAGE: http://saimaecon.com

Tim Schmidt-Eisenlohr

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Shaojun Zhang

The Ohio State University

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://sites.google.com/view/zhangshaojun

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