Bank of Canada
Institutional Affiliation: Bank of Canada
Information about this author at RePEc
NBER Working Papers and Publications
|September 2019||Trade Flows and Exchange Rates: Importers, Exporters and Products|
with Michael B. Devereux, Wei Dong: w26314
Using highly-disaggregated transaction-level trade data, we document the importance of new firm-level trade partner relationships and the addition of new products to existing relationships in driving long-run import flows. Moreover, we find that these margins are sensitive to movements in the exchange rate. We rationalize these findings in a model of international trade with endogenous matching between heterogenous importers and exporters. Simulations of the model highlight a new channel through which exchange rate movements can affect trade—through the short-run formation of new trade relationships and the range of products traded within relationships, which can impact long-run flows.
|July 2015||Exchange Rate Pass-Through, Currency of Invoicing and Market Share|
with Michael B. Devereux, Wei Dong: w21413
This paper investigates the impact of market structure on the joint determination of exchange rate pass- through and currency of invoicing in international trade. A novel feature of the study is the focus on market share of firms on both sides of the market—that is, exporting firms and importing firms. A model of monopolistic competition with heterogeneous firms has the following set of predictions: a) exchange rate pass-through should be non-monotonic and U-shaped in the market share of exporting firms, but monotonically declining in the market share of importers; b) exchange rate pass-through should be lower, the higher is local currency invoicing of imports; and c) producer currency invoicing should be related non-monotonically and U-shaped to exporter market share, and monotonically de...