Working Paper
Measuring U.S. international relative prices: a WARP view of the world
Fahle, Sean; Thomas, Charles P.; Marquez, Jaime R. (2008)
In this paper we construct a new measure of U.S. prices relative to those of its trading partners and use it to reexamine the behavior of U.S. net exports. Our measure differs from existing measures of the dollar's real effective exchange rate (REER) in that it explicitly incorporates both the difference in price levels between the United States and developing economies and the growing importance of these developing economies in world trade. Unlike existing REERs, our measure shows that relative U.S. prices have increased significantly over the past 15 years. In terms of simple correlations, ...
International Finance Discussion Papers , Paper 917