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Mathematical Research at the University of Cambridge


We document that, while the share of the pound and vehicle currencies are stable over time in the aggregate, at a granular level UK exporters invoice in more than one currency---even for the same product in a given destination---, and switch between invoicing currencies. We provide evidence that a firm's choice of invoicing currencies matters for exchange rate pass through and markup adjustment. We show that, in response to the large sterling depreciation after the Brexit referendum, exchange rate pass-through was very high for UK exports invoiced in sterling, but near zero for exports invoiced in a vehicle or in local currency. These differences narrow in four to six quarters, as export prices aligned with the weaker pound. Econometric evidence suggests that destination specific markup adjustment (i.e., pricing to market) is systematically associated only with transactions invoiced in local currency---not with transactions invoiced in pounds sterling or vehicle currencies.

Further information


Feb 27th 2020
19:15 to 21:30


The Lightfoot Room, Divinity School, St John’s College, St John’s Street, Cambridge CB2 1TP


Meredith Crowley, Department of Economics


Cambridge Statistics Discussion Group (CSDG)