02536cas a2200325 a 4500 AALejournalIMF022570 230101c9999 xx r poo 0 0eng d 5.00 USD 9798400202483 1018-5941 BD-DhAAL BD-DhAAL Cook, David. Dollar Invoicing, Global Value Chains, and the Business Cycle Dynamics of International Trade / David Cook, Nikhil Patel. Washington, D.C. : International Monetary Fund, 2022. 1 online resource (46 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Recent literature has highlighted that international trade is mostly priced in a few key vehicle currencies and is increasingly dominated by intermediate goods and global value chains (GVCs). Taking these features into account, this paper reexamines the relationship between monetary policy, exchange rates and international trade flows. Using a dynamic stochastic general equilibrium (DSGE) framework, it finds key differences between the response of final goods and GVC trade to both domestic and foreign shocks depending on the origin and ultimate destination of value added and the intermediate shipments involved. For example, the model shows that in response to a dollar appreciation triggered by a US interest rate increase, direct bilateral trade between non-US countries contracts more than global value chain oriented trade which feeds US final demand, and exports to the US decline much more when measured in gross as opposed to value added terms. We use granular data on GVCs at the sector level to document empirical evidence in favor of these key predictions of the model. Mode of access: Internet Business Cycle Dynamics imf Dollar Invoicing and Global Value Chains imf Dollar Invoicing imf Exchange Rates and Monetary Policy imf Macroeconomic Aspects of International Trade and Finance imf Prices, Business Fluctuations and Cycles imf Patel, Nikhil. IMF Working Papers; Working Paper ; No. 2022/028 Full text available on IMF http://elibrary.imf.org/view/journals/001/2022/028/001.2022.issue-028-en.xml IMF e-Library