10 Oct 2024
Brown Bag Seminar,
12:30 - 13:30 (local time: Europe/Zurich),
Anna Nausbaum
Renminbi Rising? Exporters' Response to China's Currency Internationalization
This paper investigates the heterogeneous responses of exporters to policy reforms undertaken by the People’s Bank of China to internationalize the Renminbi (RMB). Using detailed customs data from France for the initial years of these reforms (2011-2017), it documents several novel stylized facts on RMB adoption, highlighting both the growth and extreme skewness in RMB’s uptake across firms and varieties. It further examines various mechanisms underpinning self-selection into RMB and proposes a novel channel that strongly predicts RMB adoption. This channel exploits information on firms’ invoicing currency strategies in existing markets and is observed to be a valid instrument for RMB adoption. Leveraging this new instrument, the paper shows that RMB adoption was accompanied by higher prices, suggesting that firms charged a premium to buyers for the reduction in transaction frictions and exchange rate uncertainty.
Dr. Sonali Chowdhry is a Research Associate at the German Institute for Economic Research (DIW Berlin) and a Research Fellow at the Kiel Institute for the World Economy. Her work investigates the distributional implications of trade policy shocks and the structure of global supply chains using detailed firm-level databases. Over 2022-2023, she was a Max Weber Post-Doctoral Fellow at the Robert Schuman Centre for Advanced Studies, based at the European University Institute. She earned her PhD in Economics from LMU Munich as a Marie Skłodowska-Curie Fellow. Prior to the PhD, she read for the MPhil in Economics at the University of Oxford as a recipient of the Rhodes Scholarship.
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