# Question

Plot since 1999, without recession bars, the real exchange rate between U.S. goods and euro-area goods according to equation (2) in the text. Use the consumer price index (divided by 1.95 to set a common base year of 2005=100 for the U.S. and euro-area indexes) for the price of U.S. goods (FRED code: CPIAUCSL), use the harmonized index of consumer prices for the euro area goods (FRED code: CP0000EZ17M086NEST), and the U.S. dollar-euro exchange rate (FRED code: EXUSEU). Why might this measure of the real exchange rate be persistently below unity since 2003?

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