Dollar Invoicing Global Value Chains And The Business Cycle Dynamics Of International Trade

Author : Mr. David Cook,Nikhil Patel
Publisher : International Monetary Fund
Page : 44 pages
File Size : 45,7 Mb
Release : 2022-02-11
Category : Business & Economics
ISBN : 9798400202483

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Dollar Invoicing, Global Value Chains, and the Business Cycle Dynamics of International Trade by Mr. David Cook,Nikhil Patel Pdf

Recent literature has highlighted that international trade is mostly priced in a few key vehicle currencies and is increasingly dominated by intermediate goods and global value chains (GVCs). Taking these features into account, this paper reexamines the relationship between monetary policy, exchange rates and international trade flows. Using a dynamic stochastic general equilibrium (DSGE) framework, it finds key differences between the response of final goods and GVC trade to both domestic and foreign shocks depending on the origin and ultimate destination of value added and the intermediate shipments involved. For example, the model shows that in response to a dollar appreciation triggered by a US interest rate increase, direct bilateral trade between non-US countries contracts more than global value chain oriented trade which feeds US final demand, and exports to the US decline much more when measured in gross as opposed to value added terms. We use granular data on GVCs at the sector level to document empirical evidence in favor of these key predictions of the model.

Author : David Cook,Nikhil Patel
Publisher : Unknown
Page : 128 pages
File Size : 44,6 Mb
Release : 2020
Category : Electronic
ISBN : OCLC:1193061414

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Dollar Invoicing, Global Value Chains, and the Business Cycle Dynamics of International Trade by David Cook,Nikhil Patel Pdf

Author : Ms.Emine Boz,Gita Gopinath,Mikkel Plagborg-Møller
Publisher : International Monetary Fund
Page : 66 pages
File Size : 50,9 Mb
Release : 2017-11-13
Category : Business & Economics
ISBN : 9781484328859

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Global Trade and the Dollar by Ms.Emine Boz,Gita Gopinath,Mikkel Plagborg-Møller Pdf

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.

Author : Mr.Tamim Bayoumi,Jelle Barkema,Diego A. Cerdeiro
Publisher : International Monetary Fund
Page : 41 pages
File Size : 46,7 Mb
Release : 2019-09-13
Category : Business & Economics
ISBN : 9781513510569

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The Inflexible Structure of Global Supply Chains by Mr.Tamim Bayoumi,Jelle Barkema,Diego A. Cerdeiro Pdf

The rise of global supply chains has had profound effects on individual economies and the global trading system, thereby complicating standard macroeconomic analyses. For many of the new and challenging questions brought about by this phenomenon, such as its impact on the global business cycle and measurements of competitiveness, the answer largely depends on one specific aspect of global value chains: how easily they can re-configure in response to changes in prices. We propose a parsimonious, generalized specification to test the degree of global-supply-chain flexibility. Our estimates show that, in the short run, the production structure is highly inflexible, and that this rigidity has, if anything, risen over time as supply chains have deepened over time. This finding is robust to alternative price measures, including those that account for the U.S. dollar’s outsized role in trade through invoicing. While in the long run all estimated elasticities rise, supply chains remain somewhat inflexible. Our results have implications for analyses of cross-country business-cycle dynamics, the propagation of sectoral shocks, and the measurement of international competitiveness.

Author : World Bank
Publisher : World Bank Publications
Page : 511 pages
File Size : 42,5 Mb
Release : 2019-11-19
Category : Business & Economics
ISBN : 9781464814952

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World Development Report 2020 by World Bank Pdf

Global value chains (GVCs) powered the surge of international trade after 1990 and now account for almost half of all trade. This shift enabled an unprecedented economic convergence: poor countries grew rapidly and began to catch up with richer countries. Since the 2008 global financial crisis, however, the growth of trade has been sluggish and the expansion of GVCs has stalled. Meanwhile, serious threats have emerged to the model of trade-led growth. New technologies could draw production closer to the consumer and reduce the demand for labor. And trade conflicts among large countries could lead to a retrenchment or a segmentation of GVCs. World Development Report 2020: Trading for Development in the Age of Global Value Chains examines whether there is still a path to development through GVCs and trade. It concludes that technological change is, at this stage, more a boon than a curse. GVCs can continue to boost growth, create better jobs, and reduce poverty provided that developing countries implement deeper reforms to promote GVC participation; industrial countries pursue open, predictable policies; and all countries revive multilateral cooperation.

Author : Camila Casas,Mr.Federico Diez,Gita Gopinath,Pierre-Olivier Gourinchas
Publisher : International Monetary Fund
Page : 62 pages
File Size : 41,6 Mb
Release : 2017-11-22
Category : Business & Economics
ISBN : 9781484330609

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Dominant Currency Paradigm: A New Model for Small Open Economies by Camila Casas,Mr.Federico Diez,Gita Gopinath,Pierre-Olivier Gourinchas Pdf

Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchange rate while exports respond weakly, if at all; (e) strengthening of the dominant currency relative to non-dominant ones can negatively impact global trade; (f) optimal monetary policy targets deviations from the law of one price arising from dominant currency fluctuations, in addition to the inflation and output gap. Using data from Colombia we document strong support for the dominant currency paradigm.

Author : International Monetary Fund. Research Dept.
Publisher : International Monetary Fund
Page : 208 pages
File Size : 43,5 Mb
Release : 2019-10-15
Category : Business & Economics
ISBN : 9781513516172

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World Economic Outlook, October 2019 by International Monetary Fund. Research Dept. Pdf

Global growth is forecast at 3.0 percent for 2019, its lowest level since 2008–09 and a 0.3 percentage point downgrade from the April 2019 World Economic Outlook.

Author : Jongrim Ha,M. Ayhan Kose,Franziska Ohnsorge
Publisher : World Bank Publications
Page : 513 pages
File Size : 46,8 Mb
Release : 2019-02-24
Category : Business & Economics
ISBN : 9781464813764

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Inflation in Emerging and Developing Economies by Jongrim Ha,M. Ayhan Kose,Franziska Ohnsorge Pdf

This is the first comprehensive study in the context of EMDEs that covers, in one consistent framework, the evolution and global and domestic drivers of inflation, the role of expectations, exchange rate pass-through and policy implications. In addition, the report analyzes inflation and monetary policy related challenges in LICs. The report documents three major findings: In First, EMDE disinflation over the past four decades was to a significant degree a result of favorable external developments, pointing to the risk of rising EMDE inflation if global inflation were to increase. In particular, the decline in EMDE inflation has been supported by broad-based global disinflation amid rapid international trade and financial integration and the disruption caused by the global financial crisis. While domestic factors continue to be the main drivers of short-term movements in EMDE inflation, the role of global factors has risen by one-half between the 1970s and the 2000s. On average, global shocks, especially oil price swings and global demand shocks have accounted for more than one-quarter of domestic inflation variatio--and more in countries with stronger global linkages and greater reliance on commodity imports. In LICs, global food and energy price shocks accounted for another 12 percent of core inflation variatio--half more than in advanced economies and one-fifth more than in non-LIC EMDEs. Second, inflation expectations continue to be less well-anchored in EMDEs than in advanced economies, although a move to inflation targeting and better fiscal frameworks has helped strengthen monetary policy credibility. Lower monetary policy credibility and exchange rate flexibility have also been associated with higher pass-through of exchange rate shocks into domestic inflation in the event of global shocks, which have accounted for half of EMDE exchange rate variation. Third, in part because of poorly anchored inflation expectations, the transmission of global commodity price shocks to domestic LIC inflation (combined with unintended consequences of other government policies) can have material implications for poverty: the global food price spikes in 2010-11 tipped roughly 8 million people into poverty.

Author : ADBI
Publisher : Unknown
Page : 0 pages
File Size : 48,6 Mb
Release : 2015
Category : Business & Economics
ISBN : 9292571354

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Integrating SMEs Into Global Value Chains by ADBI Pdf

Globalized production networks, or global value chains, provide an opportunity for SMEs to upscale their business models and to grow across borders. This process can enhance SME competitiveness, create more jobs, and promote inclusive growth in developing Asia. The Asian Development Bank (ADB) and the ADB Institute (ADBI) recognize the importance of integrating SMEs into global value chains. To provide pathways for such integration, this study examines ways of encouraging participation in value chains, and explores policy solutions to address the financial and nonfinancial barriers faced by these enterprises.

Author : Stephanie Schmitt-Grohé,Martín Uribe,Michael Woodford
Publisher : Princeton University Press
Page : 482 pages
File Size : 55,5 Mb
Release : 2022-09-06
Category : Business & Economics
ISBN : 9780691170640

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International Macroeconomics by Stephanie Schmitt-Grohé,Martín Uribe,Michael Woodford Pdf

An essential introduction to one of the most timely and important subjects in economics International Macroeconomics presents a rigorous and theoretically elegant treatment of real-world international macroeconomic problems, incorporating the latest economic research while maintaining a microfounded, optimizing, and dynamic general equilibrium approach. This one-of-a-kind textbook introduces a basic model and applies it to fundamental questions in international economics, including the determinants of the current account in small and large economies, processes of adjustment to shocks, the determinants of the real exchange rate, the role of fixed and flexible exchange rates in models with nominal rigidities, and interactions between monetary and fiscal policy. The book confronts theoretical predictions using actual data, highlighting both the power and limits of given theories and encouraging critical thinking. Provides a rigorous and elegant treatment of fundamental questions in international macroeconomicsBrings undergraduate and master’s instruction in line with modern economic researchFollows a microfounded, optimizing, and dynamic general equilibrium approachAddresses fundamental questions in international economics, such as the role of capital controls in the presence of financial frictions and balance-of-payments crisesUses real-world data to test the predictions of theoretical modelsFeatures a wealth of exercises at the end of each chapter that challenge students to hone their theoretical skills and scrutinize the empirical relevance of modelsAccompanied by a website with lecture slides for every chapter

Author : Benno Ferrarini,David Hummels
Publisher : Edward Elgar Publishing
Page : 392 pages
File Size : 54,6 Mb
Release : 2014-10-31
Category : Business & Economics
ISBN : 9781783472093

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Asia and Global Production Networks by Benno Ferrarini,David Hummels Pdf

This timely book deploys new tools and measures to understand how global production networks change the nature of global economic interdependence, and how that in turn changes our understanding of which policies are appropriate in this new environment.

Author : Ronald MacDonald
Publisher : Routledge
Page : 334 pages
File Size : 55,5 Mb
Release : 2002-09-26
Category : Business & Economics
ISBN : 9781134838226

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Exchange Rate Economics by Ronald MacDonald Pdf

'In summary, the book is valuable as a textbook both at the advanced undergraduate level and at the graduate level. It is also very useful for the economist who wants to be brought up-to-date on theoretical and empirical research on exchange rate behaviour.' "Journal of International Economics"

Author : Gustavo Adler,Camila Casas,Mr.Luis M. Cubeddu,Ms.Gita Gopinath,Ms.Nan Li,Sergii Meleshchuk,Ms.Carolina Osorio Buitron,Mr.Damien Puy,Mr.Yannick Timmer
Publisher : International Monetary Fund
Page : 46 pages
File Size : 45,8 Mb
Release : 2020-07-20
Category : Business & Economics
ISBN : 9781513512150

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Dominant Currencies and External Adjustment by Gustavo Adler,Camila Casas,Mr.Luis M. Cubeddu,Ms.Gita Gopinath,Ms.Nan Li,Sergii Meleshchuk,Ms.Carolina Osorio Buitron,Mr.Damien Puy,Mr.Yannick Timmer Pdf

The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.

Author : Taranza T. Ganziro,Robert G. Vambery
Publisher : Emerald Group Publishing
Page : 280 pages
File Size : 41,8 Mb
Release : 2016-01-06
Category : Business & Economics
ISBN : 9781785606403

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The Exorbitant Burden by Taranza T. Ganziro,Robert G. Vambery Pdf

This economic and political science work is a rigorous analysis that demonstrates that although it is a privilege and a benefit for the US to have its currency, the dollar, as the leading world reserve currency, the privilege also proves to be a very significant economic and security burden imposed on the nation.

Author : Mr.Eugenio M Cerutti,Mr.Maurice Obstfeld,Haonan Zhou
Publisher : International Monetary Fund
Page : 36 pages
File Size : 47,5 Mb
Release : 2019-01-16
Category : Business & Economics
ISBN : 9781484395219

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Covered Interest Parity Deviations: Macrofinancial Determinants by Mr.Eugenio M Cerutti,Mr.Maurice Obstfeld,Haonan Zhou Pdf

For about three decades until the Global Financial Crisis (GFC), Covered Interest Parity (CIP) appeared to hold quite closely—even as a broad macroeconomic relationship applying to daily or weekly data. Not only have CIP deviations significantly increased since the GFC, but potential macrofinancial drivers of the variation in CIP deviations have also become significant. The variation in CIP deviations seems to be associated with multiple factors, not only regulatory changes. Most of these do not display a uniform importance across currency pairs and time, and some are associated with possible temporary considerations (such as asynchronous monetary policy cycles).