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Aggregate export price comparisons developed for U.S., Germany, Japan.

Aggregate export price comparisons developed for U.S., Germany, Japan

In February 1986, the Bureau of Labor Statistics began producing aggregate export price index comparisons between the United States and Japan and the United States and Germany on a quarterly basis. Previously, BLS had been producing export price index comparisons only for detailed commodity categories.

Export price comparison measures are ratios of the foreign export price indexes in dollar terms to specially calculated U.S. export price indexes. The measures, in index form, are designed to show relative price movements between the United States and Germany and the United States and Japan for designated market baskets of products.

An increase in a comparison index represents an increase in the price of the foreign export basket of goods compared to the U.S. price of an export basket consisting of the same volume and similar types of commodities. The opposite is true in the case of a decrease in an index. Changes in relative price movements are of interest because of their influence on changes in relative export quantities.

Comparison measures are calculated by first translating the foreign export price indexes into dollar terms and then dividing these indexes by the special U.S. export price indexes matching the foreign export categories.1 The exchange rates used in converting the foreign price indexes to dollar terms are monthly averages of certified noon buying rates in New York as published by the Federal Reserve Board.2

The indexes for periods in which different export value weights were used have been linked together. The German-U.S. export price index comparisons use 1970 German export value weights from June 1970 through March 1976; 1976 weights from June 1976 through December 1979; and 1980 weights from March 1980 to the present. The Japan-U.S. export price index comparisons have been calculated using 1975 Japanese export value weights from June 1970 through December 1979, and 1980 weights from March 1980 to the present.

The comparison measures have been aggregated according to foreign country export trade weights in order to match the classification systems of the published foreign export price indexes.3 Other weighting schemes, such as the use of U.S. export trade weights or world trade weights, would produce different results. Aggregating according to other weighting schemes would require access to price data for individual export commodities from Germany and Japan which are not available at the present time.

German export price indexes are published by the Statistisches Bundesamt [Federal Statistical Office] of the Federal Republic of Germany in the monthly publication, Preise und Preisindizes fuer die Ein- und Ausfuhr [Prices and Price Indexes for Imports and Exports]. The German export price indexes used in the comparison measures are taken from table 2.6 for the detailed product categories and from table 2.5 (SITC, Rev. II) for the aggregate categories. Currently, Germany calculates its export price indexes from approximately 6,100 individual export price series. These prices refer to export transactions concluded during the reporting month for specified commodities on an F.O.B. (free on board) German border basis, and are adjusted for quality changes. Individual price relatives are aggregated by means of the Laspeyres formula using export value weights.

The Japanese export price indexes used in the comparison measures are taken from Section II, table 3 of Price Indexes Monthly, published by the Bank of Japan. This table contains 319 export categories at different levels of aggregation. Approximately 530 export prices are surveyed by the Bank of Japan on a monthly basis. These prices are contract prices on an F.O.B. port basis and are adjusted for quality changes. The individual price relatives are aggregated as above using Japanese export value weights.

The specially constructed U.S. export price indexes used in the comparison measures have been designed to match the commodity coverage of the German and Japanese published export price indexes. The price series used in these indexes have been selected from approximately 7,700 export prices collected from U.S. exporters by the Bureau of Labor Statistics' International Price Program. The prices collected are either F.O.B. or F.A.S. (free alongside ship) transaction prices which are adjusted for quality changes. The individual price relatives are aggregated by means of the Laspeyres formula using the respective foreign export trade weights.

The Statistisches Bundesamt, producer of Germany's export and import price indexes, has furnished BLS with a table of weights and subclassifications within its published export price index categories. By using this information along with the description of Germany's Commodity Classification for Industrial Statistics (WI),4 it was possible to select export products collected by the BLS International Price Program which were judged to be similar to the products represented in the German published series. A similar procedure was used for the correct classification of U.S. products within the Japanese classification scheme. The Bank of Japan supplied BLS with a complete listing of product specifications used in the production of Japanese export price indexes. From this listing it was possible to construct special U.S. export price indexes with comparable commodity coverage.5

In regard to product coverage, it should be noted that the BLS export price data base is a sample designed to represent U.S. export price trends at the level of 4- or 5-digit SITC (Rev. II) product categories. Although a selection of export prices from this data base has been used to produce the special U.S. export price indexes for the comparison measures, the product smaples were not originally drawn for this purpose. However, the mappings of products to foreign export categories have been thoroughly examined to ensure the fullest product coverage possible.6

FOOTNOTES

ACKNOWLEDGMENT: The author gratefuly acknowledges the helpful comments of Kim Zieschang of the Bureau's Division of Index Number Research, and William Alterman and John Goth of the Division of International Prices.

1 FXPI*ER/USXPI, where FXPI is a foreign published export price index series; ER is the exchange rate; and USXPI is the U.S. export price index calculated to match the commodity coverage of the foreign published index series.

2 Data are published monthly in the Federal Reserve Bulletin; and Statistical Release G.5: Foreign Exchange Rates (Board of Governors of the Federal Reserve System).

3 Three levels of aggregation above the detailed commodity level were developed for Germany, and four levels were developed for Japan.

4 Systematisches Warenverzeichnis fuer die Industriestatistik, Ausgabe 1975 [Commodity Classification for Industry Statistics, 1975 Edition] (Wiesbaden, Statistisches Bundesamt, 1976).

5 "List of Commodity Descriptions of 1980-Based Price Indexes' (Tokyo, The Bank of Japan, Statistics Department).

6 Comparisons of United States, German, and Japanese Export Price Indexes, Bulletin 2046 (Bureau of Labor Statistics, 1980).
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
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Title Annotation:Bureau of Labor Statistics statistical method
Author:Johnson, David S.
Publication:Monthly Labor Review
Date:Jun 1, 1986
Words:1124
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