How to Subscribe
Staff Papers Archive
Research at the IMF
Free Email Notification
Export and Import Price Indices
Jemma Dridi and Kimberly Zieschang
Full Text of this Article (PDF 210K)
Abstract: Export and import price indices are essential for assessing
the impact of international trade on the domestic economy. Among their most
important uses are analyzing developments in the trade balance, measuring foreign
prices’ contribution to domestic inflation, and deflating nominal values
of exports and imports for estimating the volume of gross domestic product.
This paper discusses economic concepts for trade price indices at some length.
We note the need for reasonably frequent chaining in view of the fluctuation
in the conditioning variables of trade price indices. We characterize the effect
of the residency orientation of the index on the substitution biases of the
commonly used Laspeyres and Paasche formulas, and superlative formulas, which
greatly attenuate these biases. Finally, we consider the data sources and methods
used to compile them.