Regional Exchange Rate Indexes for the United States

In this paper we construct exchange rate indexes for the nine U.S. Bureau of the Census regions. The results indicate there are nontrivial differences between them and an identically created overall U.S. exchange rate index. The national index is cointegrated with only two of these regional indexes, and in a Granger sense, it is causing one regional index. In addition, our results indicate that two of the regional exchange rate indexes are interchangeable with the national index. These results show that researchers investigating how exchange rate changes affect regional exports or regional economic growth should be cautious in making inferences based upon a national exchange rate index.