Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153847
Authors: 
Ligthart, Jenny E.
Werner, Sebastian E. V.
Year of Publication: 
2012
Series/Report no.: 
ECB Working Paper 1414
Abstract: 
We present a new approach to study empirically the effect of the introduction of the euro on the pattern of currency invoicing. Our approach uses a compositional multinomial logit model, in which currency choice is explained by both currency-specific and country-specific determinants. We use unique quarterly panel data on the invoicing of Norwegian imports from OECD countries for the 1996-2006 period. We find that eurozone countries have substantially increased their share of home currency invoicing after the introduction of the euro, whereas the home currency share of non-eurozone countries fell slightly. In addition, the euro as a vehicle currency has overtaken the role of the US dollar in Norwegian imports. The substantial rise in producer currency invoicing by eurozone countries is primarily caused by a drop in inflation volatility and can only to a small extent be explained by an unobserved euro effect.
Subjects: 
compositional multinomial logit
euro
exchange rate risk
inflation volatility
invoicing currency
vehicle currencies
JEL: 
F33
F41
F42
E31
C25
Document Type: 
Working Paper

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