Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?
IMF Working Papers, May 1, 2007
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- Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?
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Bibliographic details
- Authors: Mick Silver
- Published: May 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451866858.001
Summary
- Author: Mick Silver
- Date: May 1, 2007
- Core question: Whether unit value export and import indices compiled from returns to customs authorities can accurately serve as surrogates for price indices in: measurement of inflation transmission; assessment of terms of trade (effects); and deflation of import and export value series to derive volume series.
- Central conclusion: Unit value indices exhibit substantial bias in representing price changes; their continued use would mislead economic analysis.
- Recommended direction: Move toward establishment-based price surveys and consider alternative strategies to improve current measures.
Evidence and Findings
- Unit value export and import indices are widely used primarily because they are relatively low cost compared with establishment price surveys.
- The paper provides evidence of substantial bias in unit value indices’ representation of price changes.
- Implication: Use of unit value indices as price proxies can distort analysis of inflation transmission, terms of trade effects, and volume measures derived from deflation.
Evaluation of Alternatives
- The paper considers the efficacy of alternative strategies for improvement of current unit value–based measures.
- The paper argues for a move to establishment-based price surveys as a superior approach to measuring trade prices.
Policy Recommendations and Analytical Implications
- Discontinue reliance on unit value export and import indices as surrogates for price indices where accurate measurement is required.
- Develop and implement establishment-based price surveys for exports and imports.
- Assess and adopt feasible intermediate strategies to reduce bias in existing unit value measures until establishment surveys are in place.
Publication and Identifiers
- Series: Working Paper No. 2007/121
- Issue: 121
- Volume: 2007
- Pages: 34
- DOI: https://doi.org/10.5089/9781451866858.001
- Stock No: WPIEA2007121
- ISBN: 9781451866858
- ISSN: 1018-5941
Source: IMF Working Papers — "Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?" by Mick Silver, May 1, 2007.