This paper develops a simple framework for computing equilibrium shares of trade currency invoicing in open economy dynamic stochastic general equilibrium models. The solution method follows closely to Devereux and Sutherland [2011]'s method in solving portfolio choice by applying information...

Based on a panel of 53 advanced and emerging countries, we evaluate the contribution of both terms of trade level and volatility shocks in explaining business cycle fluctuations. By estimating with an SVAR-SV model with the stochastic volatility built in the mean equation, we find the level...