^*Mick Silver is a senior economist in the IMF's Statistics Department. This paper was originally prepared as a background paper to the draft "Export and Import Price Index (XMPI) Manual" developed under the aegis of the United Nations Inter-Secretariat Working Group on Price Statistics to update the existing United Nations (1981) guidelines. Acknowledgments are due to Renaud Decoster for providing summary statistics from the PLANISTAT Report, Mbaye Gueye (IMF) for aggregate International Financial Statistics data, and Klaus Pötzsch (Statistisches Bundesamt) for disaggregated data on Germany. The paper benefited from useful comments by Bert Balk (Statistics Netherlands), Matt Berger (ABS), Erwin Diewert (University of British Columbia), Carsten Hansen (UN ECE), Peter Hill, Johannes Hoffmann (Deutsche Bundesbank), Hans-Albert Leifer (Deutsche Bundesbank), Ronald Johnson (U.S. BLS), Kim Zieschang (IMF), and an anonymous referee.

Abstract

Unit value export and import indices compiled from returns to customs authorities are often used as surrogates for price indices in the analysis of inflation transmission, terms of trade (effects), and to deflate import and export value series to derive volume series. Their widespread use is mainly due to their low cost relative to establishment price surveys. This paper provides evidence of substantial errors and bias in their representation of such price changes. Their continued use would mislead economic analysis. The paper considers the efficacy of alternative strategies for their improvement, and argues for a move to establishment-based price surveys.