On the Use of Unit Value Indices as Regional Indicators for the Foreign Trade Prices: The Spanish Case

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The increasing importance of foreign trade in every economy and its demonstrated relation with growth determine the need to analyze it in depth and justifies the interest of the research works that contribute to it. The aim of this work is the study of potential foreign trade deflators intended to describe the import and export flows of the Spanish regions in real terms, thus overcoming the difficulty that represents their correct interpretation without isolating it from the price effect. A first effort was focused on the analysis of the original series and on determining the most correct form to deflate them, harmonizing diverse criteria, both statistical and economic, of data availability and comparability among the different economies. After carrying out a review of the different alternatives used at the international level to obtain the foreign trade figures in real terms, this study confirms that the most common practice is the utilization of the Unit Value Indices (UVIs), which, in spite of constituting inexact measures of the export and import prices, are considered appropriate indicators for the study of their evolution, due to its balance between cost and reliability. This alternative is analyzed in minute detail, providing a theoretical base for making a decision on its suitability, given the characteristics of each economic area.

All these considerations induced us to believe that the UVIs are suitable indicators for the foreign trade deflation in the Spanish regions and, therefore, to consider their obtaining advisable, which means extensive work, firstly to guarantee the validity of data used and, secondly, to adapt and apply the methodology to the reality of the regions. The disposal of the regional UVIs entails a significant improvement that permits a more accurate vision of the foreign trade in the regions, allowing the availability of consistent conclusions on this field.

Keywords: Deflators, Unit Value Indices, Price Indices, Export Prices, Import Prices
Stream: Economics and Management
Presentation Type: Paper Presentation in English
Paper: , , Unit Value Indices as Regional Indicators of Spanish Foreign Trade Prices

Dr. Irene Riobóo

Assitant Professor, Applied Economics (Statistics), University of Castilla-La Mancha
Toledo, Toledo, Spain

Ref: I08P0591