The Effect of the Dollar on Trade Prices
26 Pages Posted: 3 Dec 2020
Date Written: 2020
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: Suggested Citation