U.S. Dollar Invoicing and GVC Participation: A Two-Way Interaction

This project examines the bidirectional relationship between dollar-invoiced trade and bilateral global value chain flows using a Two-Stage Least Squares (2SLS) framework.

The results suggest a robust negative two-way relationship: greater reliance on dollar invoicing constrains deeper GVC integration, while greater GVC participation can reduce dollar dependence. The findings are also sensitive to exchange rate volatility, underscoring the policy tradeoffs economies face under uncertainty.