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Invoicing and the Dynamics of Pricing-to-market: Evidence from UK Export Prices around the Brexit Referendum

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datacite.isnewversionof.doi10.17863/CAM.33790
dc.contributor.authorCorsetti, G.
dc.contributor.authorCrowley, M. A.
dc.contributor.authorHan, L.
dc.date.accessioned2022-01-07T15:42:59Z
dc.date.available2022-01-07T15:42:59Z
dc.date.issued2018-10-17
dc.description.abstractWe provide micro-econometric evidence that, following the large and persistent sterling depreciation after the Brexit referendum, on impact, exchange rate pass-through (ERPT) was complete for transactions invoiced in producer currency and low for sales invoiced either in a vehicle or in the destination market currency. Yet these differences strikingly narrowed within six quarters. A weaker currency did not translate into a persistent gain in price competitiveness for UK exports. At a granular level we find that UK exporters invoice in multiple currencies ̶ even when shipping a product to the same destination ̶ and switch currencies over time. Remarkably, we fail to detect significant changes in the relative shares of invoicing currencies in response to the Brexit shock. Last but not least, we find that UK firms price-to-market, i.e., adjust markups to bilateral exchange rate and CPI movements, only when they invoice sales in the destination-market currency.
dc.identifier.doi10.17863/CAM.79758
dc.identifier.otherCWPE1860
dc.identifier.otherC-INET1815
dc.identifier.urihttps://www.repository.cam.ac.uk/handle/1810/332312
dc.language.isoeng
dc.publisherFaculty of Economics, University of Cambridge
dc.relation.ispartofseriesCambridge Working Papers in Economics
dc.relation.ispartofseriesCambridge-INET Working Paper Series
dc.rightsAll Rights Reserved
dc.rights.urihttps://www.rioxx.net/licenses/all-rights-reserved/
dc.subjectexchange rate
dc.subjectpass through
dc.subjectmarkup elasticity
dc.subjectvehicle currency
dc.subjectdominant currency
dc.subjectfirm level data
dc.titleInvoicing and the Dynamics of Pricing-to-market: Evidence from UK Export Prices around the Brexit Referendum
dc.typeWorking Paper
rioxxterms.versionAO

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