The increasing importance of foreign trade in economy and its demonstrated relation with growth determine the need to analyze it in depth and justify the interest of the research works that contribute to its analysis. The aim of this work is therefore to study potential foreign trade deflators designed to describe the import and export flows of Spanish regions in real terms, and to overcome the difficulties of their correct interpretation when they are not isolated from the effects of prices. The first step was to analyze the original series and to determine the most correct form to deflate them, hence harmonizing diverse criteria, both statistical and economic, of data availability and comparability amongst economies.
After carrying out a review of the different alternatives used at international levels to obtain the foreign trade figures in real terms, we confirm that the most common practice is the use of the Unit Value Indices (UVIs), which, in spite of constituting inexact measures of the export and import prices, are considered as 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 decisions on its suitability, given the characteristics of each economic area. All these considerations led us to believe that the UVIs are suitable indicators for the foreign trade deflation in Spanish regions and that it is therefore advisable to obtain them. This means extensive work, firstly to guarantee the validity of the data used and, secondly, to adapt and apply the methodology to the reality of the different regions. The use of the regional UVIs entails a significant improvement that helps a more accurate vision of the foreign trade in the different regions, and allows more consistent conclusions on this field.
|Keywords:||Deflators, Unit Value Indices, Price Indices, Export Prices, Import Prices|
Assitant Professor, Applied Economics (Statistics), Rey Juan Carlos University, Madrid, Spain
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