International Price System, Intermediate Inputs And Regional Trade
Speaker(s) Nikhil Patel, Economist, Bank for International Settlements Publication CAFRAL Conference room on Mezzanine Floor, Main Building. Reserve Bank of India, Fort, Mumbai 400 001

International trade is mostly priced in a few key vehicle currencies. We model the effects of this pricing system on the macroeconomic dynamics of regional trade. We find key differences between the dynamic response of regional trade in final goods and intermediate materials to internal and external shocks. We use a granular decomposition of bilateral exports at the sector level to test the main predictions of the model and find reasonable evidence for the muted impact of US monetary policy stance on intermediate goods and global value chain oriented trade on the one hand, and final goods and regionally oriented trade on the other.”