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Dominant Currency Paradigm: A Review,” Gopinath G, Itskhoki O. NBER Working Paper 29556, December 2021. Forthcoming as “Dominant Currencies: A Survey,” in Handbook of International Economics Vol. 5, Gopinath G, Helpman E, Rogoff K, editors, Amsterdam: Elsevier.


Pricing in the producer currency results in strong expenditure switching forces from movements in exchange rates, which are generally efficient and provide a rationale for floating exchange rate regimes. In contrast, sticky destination-currency prices shield allocations from exchange rate movements and limit the extent of expenditure switching, at least in the short run. Pricing in the dominant currency results in asymmetric expenditure switching patterns, whereby dominant currency appreciation has negative consequences for global trade and production and introduces additional international policy externalities. See “Dominant Currency Paradigm,” Gopinath G, Boz E, Casas C, Díez F, Gourinchas P-O, Plagborg-Møller M. American Economic Review 110(3), March 2020, pp. 677–719, and “Optimal Policy under Dollar Pricing,” Egorov K, Mukhin D. London School of Economics Working Paper, October 2021.


Dominant Currencies: How Firms Choose Currency Invoicing and Why It Matters,” Amiti M, Itskhoki O, Konings J. NBER Working Paper 27926, October 2020, and forthcoming in the Quarterly Journal of Economics 137(3), 2022.


Currency Choice and Exchange Rate Pass-Through,” Gopinath G, Itskhoki O, Rigobon R. NBER Working Paper 13432, September 2007, and American Economic Review 100(1), March 2010, pp. 306–336; “An Equilibrium Model of the International Price System,” Mukhin D. American Economic Review 112(2), February 2022, pp. 650–688.


Equivalence Results for Optimal Pass-Through, Optimal Indexing to Exchange Rates, and Optimal Choice of Currency for Export Pricing,” Engel C. Journal of the European Economic Association 4(6), December 2006, pp. 1249–1260.


Importers, Exporters, and Exchange Rate Disconnect,” Amiti M, Itskhoki O, Konings J. NBER Working Paper 18615, revised October 2013, and American Economic Review 7(104), July 2014, pp. 1942–1978; “International Shocks and Domestic Prices: How Large Are Strategic Complementarities?” Amiti M, Itskhoki O, Konings J. NBER Working Paper 22119, and subsequently as “International Shocks, Variable Markups and Domestic Prices,” The Review of Economic Studies 86(6), November 2019, pp. 2356–2402.


For imports, there is no robust relationship between firm size and currency use. This is consistent with the common theoretical approach whereby currency choice in exports is a more active firm-level decision than in imports: exporters make currency-choice and price-setting decisions, while importers choose quantities given prices.



Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation,” Auer R, Burstein A, Lein S. American Economic Review 111(2), February 2021, pp. 652–686.



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