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Industry-specific exchange rates for the United States

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Abstract

The trade-weighted exchange rates constructed for the aggregate U.S. economy do not always capture the changes in industry competitive conditions induced by movements in specific bilateral exchange rates. Exchange rates produced using information on industry-specific trade partners are often better suited for this task. This article constructs three industry-specific real exchange rate measures for the United States-one using export partner weights only, a second using import partner weights, and a third using an average of export and import weights by industry-and examines how they co-move or diverge from the aggregate economy wide measures. The exercise suggests that researchers who use aggregate exchange rate indexes rather than industry-specific measures might overlook the empirical value of exchange rates for the producer profits of specific U.S. industries.

Suggested Citation

  • Linda S. Goldberg, 2004. "Industry-specific exchange rates for the United States," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 1-16.
    • Handle: RePEc:fip:fednep:y:2004:i:may:p:1-16:n:v.10no.1
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    4. Patricia S. Pollard & Cletus C. Coughlin, 2006. "Passthrough Estimates and the Choice of an Exchange Rate Index," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 535-553, September.
    5. Watson, Mark W., 1986. "Univariate detrending methods with stochastic trends," Journal of Monetary Economics, Elsevier, vol. 18(1), pages 49-75, July.
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    Keywords

    Industries; Foreign exchange rates;

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