Export performance, invoice currency, and heterogeneous exchange rate pass-through

Richard Fabling and Lynda Sanderson

No DP2013/01, Reserve Bank of New Zealand Discussion Paper Series from Reserve Bank of New Zealand

Abstract: Using comprehensive, shipment-level merchandise trade data, we examine the extent to which New Zealand exporters maintain stable New Zealand dollar prices by passing on exchange rate changes to foreign customers. We find that the extent to which firms absorb exchange rate fluctuations in the short run is significantly related to both invoice currency choice and exporter characteristics when these are analysed separately. However, when jointly accounted for, the role of exporter characteristics largely disappears. That is, some firm types are more inclined to invoice in the New Zealand dollar, while others use either the importer or a third currency. In the short run, this translates into differences in exchange rate pass through because of price rigidity in the invoice currency. Differences across invoice currencies diminish, but do not disappear, over time as prices adjust to reflect bilateral exchange rate movements.

JEL-codes: D12 F14 F31 (search for similar items in EconPapers)
Pages: 36 p.
Date: 2013-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.rbnz.govt.nz/-/media/ReserveBank/Files/ ... ers/2013/dp13-01.pdf

Related works:
Journal Article: Export Performance, Invoice Currency and Heterogeneous Exchange Rate Pass-through (2015)
Working Paper: Export Performance, Invoice Currency, and Heterogeneous Exchange Rate Pass-Through (2013)
Working Paper: Export performance, invoice currency, and heterogeneous exchange rate pass-through (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nzb:nzbdps:2013/01

Access Statistics for this paper

More papers in Reserve Bank of New Zealand Discussion Paper Series from Reserve Bank of New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Reserve Bank of New Zealand Knowledge Centre ().