A theory of the currency denomination of international trade

The currency denomination of exports — A questionnaire study

“…This is to us a surprising finding. The desire to limit involuntary price variation with respect to the prices of competitors is intuitively appealing and figures prominently in the theoretical literature (see for instance Bacchetta and van Wincoop, 2005;Goldberg and Tille, 2006). Empirically there is also some support for it.…”

Global monetary policy under a dollar standard

“…But most of this literature focuses on symmetric environments. 3 Bacchetta and Van Wincoop (2005) and Kenen (2003) note that the US dollar is used as an invoice currency for the overwhelming majority of US imports, but for other OECD countries, imports are mainly invoiced in foreign currency. reference currency monetary authority to choose both its own and the rest of the world's monetary rules to maximize its own welfare.…”

Effects of exchange rate variations on bilateral trade with a vehicle currency: Evidence from China and Singapore

“…Following Krugman (1980), Rey (2001) develops a threecountry, three-currency model of the world economy to study the emergence of vehicle currencies, with a focus on the role of the pattern of international trade during this evolution. Later contributions with extensive theoretical work in this area include Devereux et al (2004), Bacchetta andvan Wincoop (2005), as well as Goldberg and Tille (2008), which introduce other perspectives like industry features, country sizes, and so on. More recently, Eichengreen (2010) gives a detailed historical account of the rise of the US dollar as an international currency; Devereux and Shi (2013) explore the nature of the efficiency gains arising from a vehicle currency through constructing a dynamic general equilibrium model.…”