Invoicing Currency, Exchange Rate Pass-through and Value-Added Trade: An Emerging Country Case
| Title: |
Invoicing Currency, Exchange Rate Pass-through and Value-Added Trade: An Emerging Country Case |
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Number: |
19/17 |
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Author(s): |
Hülya Saygılı |
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Language: |
English |
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Date: |
August 2019 |
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Abstract: |
We explore the role of invoicing currency and global production integration on exchange rate pass-through to import and export prices, using 3-digit product level data classified by end-use and 2-digit sector level data displaying varying integration to global value-added trade from an emerging country, Turkey. The results show that, overall, rates of exchange rate pass-through to export prices are higher than those to import prices. The rare of pass-through is significantly higher for local currency-priced goods. The pass-through to the US dollar and euro-priced goods depends on the type of products traded and value-added trade. For consumption and capital goods, pass-through rates are significant and relatively high when they are priced in the US dollars. For intermediate goods the pass-through to euro-priced goods are higher than those to the US dollar-priced goods. In addition, sectors displaying a low or high association with global value chains tend to have a higher exchange rate pass-through than those placing in the middle range and the rate is slightly higher for sectors having lower global linkage. |
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Keywords: |
Exchange rate pass-through, Currency of invoicing, Imported input, Value-added trade |
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JEL Codes: |
F1; F3; F4 |
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