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

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

The results suggest that greater reliance on dollar invoicing can constrain deeper GVC integration, while greater GVC participation can reduce dollar dependence. The findings highlight how dominant-currency trade shapes the benefits and risks of integration, especially when exchange-rate volatility is high.