The Determinants of Euro Invoicing in Extra-EU Exports

I empirically analyse the determinants of euro invoicing with a panel data regression. This study makes use of new data, resulting in a homogenous dataset for 27 EU countries. Looking at various macroeconomic variables, I find that the main determinants of euro invoicing are membership of the Euro Area and the share of manufactured goods in total extra-EU exports, which both positively influence the percentage of extra-EU exports that is invoiced in euro. A higher exchange rate volatility or a higher inflation differential make euro invoicing less likely, which may indicate that the euro is not often used as vehicle currency.