Journal Article

Industry-specific exchange rates for the United States

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.

Keywords: Industries; Foreign exchange rates;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Economic Policy Review

Publication Date: 2004

Issue: May

Pages: 1-16

Order Number: v.10 no.1