Unit Values for Import and Export Price Indexes – A Proof of Concept

Abstract

The U.S. Bureau of Labor Statistics' import and export price indexes (MXPI) are published from an ever decreasing sample relative to the size of trade. The Principal Federal Economic Indicator has an opportunity to retain and regain detailed MXPI using unit values calculated from comprehensive administrative trade data. The unit values from the high-frequency, high-volume source present a dilemma for official price statistics, given that unit value indexes are known to not track price indexes. This BLS research proposes a new methodological and statistical approach to identify detailed homogeneous product categories that show minimal unit value bias to include in the MXPI. The proof of concept for identifying homogeneous items is based on an analysis of two export products-dairy and vegetables-for 2015-16. The results provide a prototype and a roadmap for a consistent and testable approach that aligns with the concepts in official MXPI measures, maximizes the use of high-frequency data, and mitigates the likelihood of unit value bias. Applying the prototype, 52 of 142 import and 50 of 129 export 5-digit BEA End Use categories are identified as homogeneous using administrative data. This coverage accounts for 35 and 39 percent of the 2016 value of imports and exports, respectively. Incorporating unit values has the potential to deepen coverage and expand publication of detailed import and export price indexes.

Unit Value Indexes for Exports – New Developments Using Administrative Trade Data

“…Similar to the proof of concept for unit values described in Fast and Fleck (2022) we propose using a coefficient of variation test to select homogeneous items as a first step to evaluate UVIs and the item keys underlying them for unit value bias. The coefficient of variation test identifies whether within-month price variation of items is small relative to the mean price of that item, which we take as an indicator that the transactions for each item involve relatively homogeneous goods.…”

“…Both supply and demand are variable, as yield, quality, and availability depend on growing seasons and weather locally and worldwide. There is also significant competition in the sector; 2015 -2016 records report more than 4,000 exporters monthly, and nearly 1,000 large regular exporters (Fast and Fleck 2019). Missing prices are filled in by imputation, and this can also cause variability.…”