Although currency invoicing in international trade transactions is central to the transmission of monetary policy, the forces motivating the choice of currency have long been debated. We introduce a model wherein agents involved in international trade can invoice in the exporter's currency, the...

With the U.S. trade deficit at high levels, many look to a dollar depreciation to curb the U.S. appetite for foreign goods by pushing up the cost of imports. Yet three factors - the use of the dollar in invoicing U.S. trade, the market share concerns of exporters, and sizable U.S. distribution...

The trade-weighted exchange rates constructed for the aggregate U.S. economy do not always capture the changes in industry competitive conditions induced by movements in specific bilateral exchange rates. Exchange rates produced using information on industry-specific trade partners are often...

U.S. manufacturing industries are becoming increasingly sensitive to changes in the international value of the dollar. A look at recent studies of exchange rate effects on industry performance suggests that the 1997-98 rise in the dollar may significantly reduce U.S. producers' profits and...