Global Trade and the Dollar /

We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exch...

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Автор: Boz, Emine
Інші автори: Gopinath, Gita, Plagborg-Moller, Mikkel
Формат: Журнал
Мова:English
Опубліковано: Washington, D.C. : International Monetary Fund, 2017.
Серія:IMF Working Papers; Working Paper ; No. 2017/239
Онлайн доступ:Full text available on IMF
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100 1 |a Boz, Emine. 
245 1 0 |a Global Trade and the Dollar /  |c Emine Boz, Gita Gopinath, Mikkel Plagborg-Moller. 
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520 3 |a We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral non-commodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) The strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation. A 1 percent U.S. dollar appreciation against all other currencies in the world predicts a 0.6-0.8 percent decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. 4) Using a novel Bayesian semiparametric hierarchical panel data model, we estimate that the importing country's share of imports invoiced in dollars explains 15 percent of the variance of dollar pass-through/elasticity across country pairs. Our findings strongly support the dominant currency paradigm as opposed to the traditional Mundell-Fleming pricing paradigms. 
538 |a Mode of access: Internet 
700 1 |a Gopinath, Gita. 
700 1 |a Plagborg-Moller, Mikkel. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2017/239 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2017/239/001.2017.issue-239-en.xml  |z IMF e-Library