US dollar is mainly used as currency for international trade transactions. Especially, trade transactions among US, Japan and ANIES are largely based on US dollar. This paper analyzes how the firm's price setting behavior based on dollar-denominated transaction affects the international transmission effect of Japanese monetary policy, especially on economic welfare of ANIES. We develop a three country model of US, Japan and ANIES introduces dollar-denominated transaction into the framework of the “New Open-Economy Macroeconomics”. We show that Japanese monetary policy has “beggar-thy-neighbor” effect on ANIES compared to the case of producer's currency pricing.
