Essays on Firms in International Trade
type: CreativeWork
description: My PhD thesis broadly explores how a firm responds to a changing environment in international trade through three distinct topics. I examine how firms adjust their technology investment to foreign competition and demand, and how firm performance is affected by a global trade policy shock. And I investigate the dynamics of firms’ choices of invoicing currencies for exports over time. My first chapter studies how the choices of individual firms contribute to the dominance of a currency in global trade. Using a detailed administrative dataset for UK exporters’ extra-EU trade over 2010-2016, we document strong evidence of two mechanisms that promote the use of a dominant currency: (1) prior experience: the probability that a firm invoices its exports to a new market in a dominant currency is increasing in the number of years the firm has used the dominant currency in its existing markets; (2) strategic complementarities: a firm is more likely to invoice its exports in the currency chosen by the majority of its competitors in a foreign destination market to stabilize its residual demand in that market. We show that the introduction of a fixed managerial cost into a model of invoicing currency choice yields dynamic paths of currency choice that match our empirical findings. We argue that these channels reinforce one another to drive and sustain dollar dominance in international trade. My second chapter empirically examines the propagation of the US-China tariff to other major countries’ exports to China in 2018-19. Using an industry-country specific measure of input-output linkages with China, I find that the US tariffs on Chinese imports had a significant adverse impact on other trading partners by dampening Chinese demand for foreign inputs. Evidence also suggests that the China’s retaliatory tariffs against the US and its most-favoured-nation (MFN) tariff cuts during the same period positively affected other countries in non-intermediate goods. However, the negative up…
abstract: My PhD thesis broadly explores how a firm responds to a changing environment in international trade through three distinct topics. I examine how firms adjust their technology investment to foreign competition and demand, and how firm performance is affected by a global trade policy shock. And I investigate the dynamics of firms’ choices of invoicing currencies for exports over time. My first chapter studies how the choices of individual firms contribute to the dominance of a currency in global trade. Using a detailed administrative dataset for UK exporters’ extra-EU trade over 2010-2016, we document strong evidence of two mechanisms that promote the use of a dominant currency: (1) prior experience: the probability that a firm invoices its exports to a new market in a dominant currency is increasing in the number of years the firm has used the dominant currency in its existing markets; (2) strategic complementarities: a firm is more likely to invoice its exports in the currency chosen by the majority of its competitors in a foreign destination market to stabilize its residual demand in that market. We show that the introduction of a fixed managerial cost into a model of invoicing currency choice yields dynamic paths of currency choice that match our empirical findings. We argue that these channels reinforce one another to drive and sustain dollar dominance in international trade. My second chapter empirically examines the propagation of the US-China tariff to other major countries’ exports to China in 2018-19. Using an industry-country specific measure of input-output linkages with China, I find that the US tariffs on Chinese imports had a significant adverse impact on other trading partners by dampening Chinese demand for foreign inputs. Evidence also suggests that the China’s retaliatory tariffs against the US and its most-favoured-nation (MFN) tariff cuts during the same period positively affected other countries in non-intermediate goods. However, the negative up…
author: Son, Minkyu
language: eng
keywords: Invoicing currency, Input-output linkage, Firm R&D
license: https://apollo8-f-pro.lib.cam.ac.uk/bitstreams/72453fdb-bc7b-41ac-a4f5-2993a62f03e9/download
license: https://www.rioxx.net/licenses/all-rights-reserved/
date published: 2021-01-26
date modified: 2026-07-22T22:24:00Z
provider: Cambridge University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: University of Cambridge

PropertyValue
property ID: DOI
value: 10.17863/CAM.70472