APL (Ajiken Power Lunch)

APL (Ajiken Power Lunch) is a lunchtime workshop open to public, including IDE staffs, visiting research fellows, IDEAS students, outside researchers and graduate students. This workshop provides a platform for presentation of any work in progress where we can discuss in either English or Japanese.

Those who would attend a seminar are asked to announce yourself to receptionists on your arrival at the IDE and to obtain APL Organizers' signature on your admission card after the seminar.

July 6, 2015. (Monday) 15：30-17：30

Institute of Developing Economies, Japan External Trade Organization C23 Meeting Room 　

Benefits of Home Currency Invoicing

We present a model of endogenous choice of import frequency and invoice currency to infer the benefits of home currency invoicing. In the model, those benefits are represented by fixed costs of exchange rate risk management paid by importers when they work with foreign currency invoicing. Using a very detailed dataset on Thai imports, we show that those benefits of average Thai importer range between 7.3% (1,500 USD) of one-time shipment value in our most conservative specification and 17.1% (3,600 USD). Those benefits become larger when the share of the export country currency in daily global foreign exchange market turnover is lower, or the export country is one of the partners of Thailand’s regional trade agreements. Further, we find that frequency of shipments is higher and the value per shipment is smaller for transactions priced in buyers’ currency than those not priced in it. Our model provides a rationale for these empirical findings.

Dr. Taiyo Yoshimi (Associate Professor, Department of Economics, Nanzan University)

Kazunobu HAYAKAWA

Japanese