1 International Trade Statistics Expert Meeting, September 2006, OECD Paris International Export and Import Price Indices Manual Paul Schreyer, OECD

2 A bit of history 1902: first industrial commodities price index in the USA for the period 1867 – 1890 Method: un-weighted average of 250 commodities Purpose: investigate effects of tariff laws on prices of domestic and imported agricultural and manufactured products 1903: first WPI for the UK presented by the Board of Trade, and mainly derived from trade accounts Method: 45 commodities

3 100 years later: the Price Index Manuals Efforts to address index methods concerns –ISWGPS established in 1998; –ILO, IMF, ECE, OECD, World Bank, Eurostat, and UNSD –Core Group serving on ISWGPS ILO CPI Manual (2004) (first published 1989) IMF PPI Manual (2004) (first published 1979) IMF External trade XMPI Manual (draft) (first published 1981) –Ongoing work: revised versions non-English translations Real estate price index (OECD) Core inflation (IMF)

4 Organisation of the XMPI Manual Foreword Preface Reader's guide 1. Introduction to XMPI methodology 2. Background, purpose, and uses of export and import price indices 3. Valuation, timing, coverage, and classifications 4. Data sources 5. Sampling issues in price collection 6. Price collection 7. Treatment of quality change 8. Item substitution, sample space, and new goods 9. An overview of export and import price index calculation 10. The treatment of specific products 11. Errors and bias in the export and import price indices 12. Organization and management 13. Publication, dissemination, and user relations 14. The system of price statistics 15. Index number theory 16. Axiomatic and stochastic approach 17. Economic approach 18. Transfer prices 19. Price indices using an artificial data set 20. Elementary indices 21. Quality change and hedonics 22. Treatment of seasonal products Glossary Bibliography

5 Organisation of the XMPI Manual Foreword Preface Reader's guide 1. Introduction to XMPI methodology 2. Background, purpose, and uses of export and import price indices 3. Valuation, timing, coverage, and classifications 4. Data sources 5. Sampling issues in price collection 6. Price collection 7. Treatment of quality change 8. Item substitution, sample space, and new goods 9. An overview of export and import price index calculation 10. The treatment of specific products 11. Errors and bias in the export and import price indices 12. Organization and management 13. Publication, dissemination, and user relations 14. The system of price statistics 15. Index number theory 16. Axiomatic and stochastic approach 17. Economic approach 18. Transfer prices 19. Price indices using an artificial data set 20. Elementary indices 21. Quality change and hedonics 22. Treatment of seasonal products Glossary Bibliography Background

6 Organisation of the XMPI Manual Foreword Preface Reader's guide 1. Introduction to XMPI methodology 2. Background, purpose, and uses of export and import price indices 3. Valuation, timing, coverage, and classifications 4. Data sources 5. Sampling issues in price collection 6. Price collection 7. Treatment of quality change 8. Item substitution, sample space, and new goods 9. An overview of export and import price index calculation 10. The treatment of specific products 11. Errors and bias in the export and import price indices 12. Organization and management 13. Publication, dissemination, and user relations 14. The system of price statistics 15. Index number theory 16. Axiomatic and stochastic approach 17. Economic approach 18. Transfer prices 19. Price indices using an artificial data set 20. Elementary indices 21. Quality change and hedonics 22. Treatment of seasonal products Glossary Bibliography Practice of compilation

7 Organisation of the XMPI Manual Foreword Preface Reader's guide 1. Introduction to XMPI methodology 2. Background, purpose, and uses of export and import price indices 3. Valuation, timing, coverage, and classifications 4. Data sources 5. Sampling issues in price collection 6. Price collection 7. Treatment of quality change 8. Item substitution, sample space, and new goods 9. An overview of export and import price index calculation 10. The treatment of specific products 11. Errors and bias in the export and import price indices 12. Organization and management 13. Publication, dissemination, and user relations 14. The system of price statistics 15. Index number theory 16. Axiomatic and stochastic approach 17. Economic approach 18. Transfer prices 19. Price indices using an artificial data set 20. Elementary indices 21. Quality change and hedonics 22. Treatment of seasonal products Glossary Bibliography Theoretical aspects

8 Main issues associated with XMPI Unit values rather than survey-based methods Typically, even most detailed HS category brings together too heterogenous products to use unit values as prices XMPI Manual recommends survey-based price indices, based on observations of fully described and differentiated products Relevant methods are described in the XMPI Manual Index number formulae Like with other price indices, Laspeyres-type index numbers no more correspond to target price indices The Manual sets out the economic and index number theoretical reasons for the choice of the target formula Quality change and new goods Common problem in all price indices (CPIs, PPIs) that equally affects XMPI

9 Main issues associated with XMPI Treatment of seasonal commodities For short-term indicators, the use of annual weights is problematic when it comes to seasonal commodities: monthly price changes that are out of seasons can be greatly magnified by annual weights Special approaches to weighting needed for seasonal commodities Insufficient or no coverage of services While common to many price statistics, this seems to be particularly acute in the area of XMPI with their traditional and strong focus on products XMPIs should however benefit from strong efforts by OECD countries to develop producer price indices for services

10 Drafting and review process Based on and consistent with PPI Manual (2004), which in turn is based on, and consistent with, CPI Manual (2004). Working under the IWGPS: –IMF drafted first version now on IMF web site; –IMF wrote to statistical authorities asking for comments to be posted; –IMF organizing seminar in September, 2006 involving focus group of countries, specialists and interested parties; –Comments from above to be incorporated into draft and some further specialist review; –Refer back to IWGPI.

11 Where to find manuals on the website CPI Manual on ILO website: PPI Manual on IMF website: XMPI (Draft) Manual on IMF website COMMENTS – IN PARTICULAR FROM TRADE STATISTICIANS – MOST WELCOME!