Does the Exchange Rate Really Affect Consumer Spending?

Abstract

This paper examines the extent to which changes in imports or exports of U.S. consumer goods and services occurs in response to a change in the exchange rate, 1960 -2000. The data used are taken from the Economic Report of the President, 2002. The findings indicate that an increase in the trade weighted exchange rate of about one percent is associated with an increase in imports of consumer goods of approximately $1 billion dollars the year after the change. The same level increase seems associated with a decline in con-sumer goods exports of about$0.75 billion dollars.