Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300809 
Year of Publication: 
2024
Series/Report no.: 
DIW Discussion Papers No. 2085
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
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 invoicing in RMB significantly boosted exports for varieties sold to China. Overall, the findings suggest that early RMB adoption, although limited across firms, provided an important competitive edge when exporting to China.
Subjects: 
Firm heterogeneity
Invoicing currency
Trade transactions
China
JEL: 
F14
F23
Document Type: 
Working Paper

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