Dominant Currencies: How firms choose currency invoicing and why it matters

Mary Amiti, Oleg Itskhoki, Jozef Gerard L Konings

Research output: Contribution to journalArticlepeer-review


We analyze how firms choose the currency of invoicing and the implications of this choice for exchange rate pass-through into export prices and quantities. Using a new dataset for Belgian firms, we find currency invoicing to be an active firm-level decision, shaped by the firm’s size, exposure to imported inputs, and the currency choices of its competitors. Our results show that the firm’s currency choice, in turn, has a direct causal impact on the exchange rate pass-through into prices and quantities. Moreover, the differential price response of similar firms that invoice in different currencies is large, persists beyond a one-year horizon, and gradually wanes in the long run. This results in allocative expenditure-switching effects on export quantities, which build up over time, suggesting a role for quantity adjustment frictions in addition to price stickiness. Our findings shed light on the mechanisms that make or break a dominant currency and the consequences it has for the international transmission of shocks.
Original languageEnglish
JournalQuarterly Journal of Economics
Publication statusAccepted/In press - 2022


  • currency invoicing
  • exchange rate


Dive into the research topics of 'Dominant Currencies: How firms choose currency invoicing and why it matters'. Together they form a unique fingerprint.

Cite this