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Network‐adjusted market share and the currency denomination of trade

Author

Listed:
  • Davide Arioldi
  • Luigi Ventura
  • Mark David Witte
Abstract
The currency denomination of trade has been shown in many recent contributions to have far‐reaching effects on different macroeconomic phenomena, such as inflation and the international transmission of nominal shocks. In this work, we apply a novel index of bargaining power, which incorporates the network dimension of trade and brings fresh evidence as to the relevance of network‐related features (and implied bargaining power) in the choice of invoicing currency, which has received relatively little attention in the empirical literature, so far. By using a highly disaggregated, almost transaction level, data set of Italian imports and exports, we contribute to the existing empirical literature by documenting a very significant impact of trade network asymmetries, captured by our adjusted index of market share, on the choice of an invoice currency.

Suggested Citation

  • Davide Arioldi & Luigi Ventura & Mark David Witte, 2022. "Network‐adjusted market share and the currency denomination of trade," The World Economy, Wiley Blackwell, vol. 45(8), pages 2560-2592, August.
    • Handle: RePEc:bla:worlde:v:45:y:2022:i:8:p:2560-2592
    DOI: 10.1111/twec.13239
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    References listed on IDEAS

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