Optimal İhracat Para Birimi Seçimi: Teorik Bir Yaklaşım

Abstract

The invoicing currency choice in international trade is a vital issue for the spread of business cycles and monetary policy. Following Devereux, Engel and Storgaard’s (2004) theoretical framework, this paper allows the role of imported intermediate goods in the decision of invoicing currency as in Chung (2016). However, we extend the model by a more general production function, adding capital as the second factor of production. We, thus, develop a novel model with two factors of production in the invoicing currency literature that also features imported inputs. In our model, the covariance terms involving the more realistic cost index when production involves not just labour but also capital play a critical role in decision making on pricing strategies.