Essays in international macroeconomics and finance

Thesis

This thesis documents novel facts and patterns in international macroeconomics and finance. It furthermore investigates their drivers through both theoretical and empirical methods, leveraging on public and confidential granular microeconomic data. The thesis consists of three papers, in the respective contexts of international financial sanctions, trade invoicing, and climate finance.

Chapter 1, ‘Sanctions and Currencies in Global Credit’, studies how the 2014 EU-US sectoral sanctions against Russia changed the currency composition of international credit to the Russian economy. Using firm-, bank-, and loan-level data, it shows that sanctions triggered a sizeable shift away from dollar-denominated lending and towards euro-denominated credit, reflecting higher sanction-compliance risk in the dollar payment system. This chapter is co-authored with Giovanni Rosso and Roger Vicquéry.

Chapter 2, ‘Dominant Currency Pricing Transition’, documents a striking shift in invoicing behaviour: the dollarisation of UK exports after the 2016 Brexit referendum. Using transaction-level customs data, it shows that large exchange-rate movements and firms’ currency mismatches can endogenously generate a transition towards dominant currency pricing, with important consequences for exchange-rate pass-through and trade elasticities. This chapter is also co-authored with Giovanni Rosso and Roger Vicquéry.

Chapter 3, ‘Greenback? Sustainable Investing and the International Transmission of Monetary Policy’, studies how US monetary policy spillovers differ across foreign firms depending on their carbon emissions. Combining high-frequency monetary surprises with firm-level data on non-US firms, it shows that tighter US monetary policy disproportionately affects higher-emission firms, and provides evidence for both a green-preference channel and a limited risk-bearing-capacity channel.

Authors: Garofalo, M

• DOI: 10.5287/ora-bejybrxjx
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English