Foreign Currency as a Barrier to International Trade: Evidence from Brazil
The Review of Economics and Statistics
2026
Abstract This paper studies the causal effect of foreign currency dependence on international trade by exploiting Brazil and Argentina's 2008 introduction of a bilateral payments system that eliminated the U.S. dollar as vehicle currency. I identify causal effects using a triple-difference design comparing exports across municipalities with varying bank access and across destinations to control for contemporaneous shocks including the financial crisis. Firm-level analysis finds that local currency adoption increased export values significantly, with effects concentrated among non-commodity exporters. These results demonstrate that foreign currency dependence constitutes a meaningful barrier to emerging market trade.
- DOI
- 10.1162/rest.a.1707
- Pages
- 1-32
- Language
- en
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