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Title:Unit Value Bias Reconsidered PDF Logo
Authors:von der Lippe, Peter
Mehrhoff, Jens
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: How Reliable are German Aggregate Price Indices? F2-V3
Abstract:The present paper explores, both theoretically and empirically, the bias of unit value indices as opposed to genuine price indices in foreign trade. An analysis of German data reveals conceptual and methodological differences, and their impact on economic indicators, namely imported inflation, terms of trade and gross domestic product, is quantified. By introducing a formal theory, the sources of the discrepancy can be attributed to a Laspeyres effect and a structural component, both strongly negative. Only the latter reflects the unit value bias. Thus, much attention should be paid to gaining a better understanding of the index concepts.
Subjects:Laspeyres price index
Paasche unit value index
unit value bias
imported ination
commodity terms of trade
real gross domestic product
JEL:C43
E31
F14
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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