Transcript Power Point Presentation

NATIONAL ACCOUNTS
STATISTICS WORKSHOP
PRICE AND VOLUME MEASURES
Workshop on national accounts for Asian member
countries of the organization of Islamic Conference in
Ankara, Turkey
1-2 December 2008
by
Devi Manraj
IMF Regional statistics advisor
[email protected]
PRICE AND VOLUME
MEASURES

National accounts estimates and tables are
presented either at current or constant prices

“Constant price” should strictly be confined to
volume measures

“Real” is only used for income flows (at constant
purchasing power) e.g. “real national income”

It is preferable to avoid the “real term” with
reference to GDP. The preferred term is “GDP at
constant prices”
2
Why do we need price and
volume measures?

For goods and services this means that when the
nominal value of goods and services transacted
changes
 How much is due to changes in quantity or
quality( or volume)?
 How much is due to changes in the prices of the
goods or services?

Volume = quantity * quality , where quantity
measurement is only meaningful for homogeneous
goods
3
Main issues of price and
volume measures

What is the relationship between the
current price value and the price and
volume measures for NA components?

How to aggregate them?

How to obtain price and volume
measures in practice?
4
SNA recommendation for GDP
and other aggregates measures

State of the art
 Ideal method: annual chained Fischer
price and volume indices for GDP and its
components
 Second best: annually chained
Laspeyres volume indices and Paasche
price indices OR annually chained
Paasche volume indices and Laspeyres
price indices
5
Price and volume
measurements of GDP
 Price
and volume measurements for
GDP are obtained through price and
volume measures of its components
 From
the production approach:
 For value added by industry plus
 for taxes less subsidies on products
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Price and volume
measurements

From the expenditure approach:
 For government final consumption
expenditure plus
 For households final consumption
expenditure plus
 For NPISH’s final consumption
expenditure plus
 For capital formation plus
 For exports less
 For imports
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Quantity, price and value

Quantity: unit for measuring amount of a
good /service. Quantities are additive only at
he single product level

Price: value of one unit of a good /service of
same quality

An average of prices of different
goods/services should not be used to
measure price changes over time
8
Quantity, price and value
 Value:
value = price * quantity. Value is
additive across different products
– At single level: vit = p it* q it
– At an aggregate level: V it =Σi vit =Σi (p it* q it )
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Volume versus quality

Volume is obtained when prices of a
previous period are used for valuation

Changes in volume arise due to changes
in “product-mix” or quality and quantity
(see next slides for details)

Change in product mix reflect change in
quality and not quantity
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Volume versus quality




Price indices based on unit values or
average value of units that are not
homogeneous are affected by
changes in the mix of the items
changes in their prices
Unit value indices do not provide good
measures of average price changes over
time
11
Relationship between value,
volume and price indices

Current value index divide by value index at
constant price = implicit price deflator i.e.

Vt*100/V0 = Σi (pi,t* qi,t )*100/Σi (pi,0* qi,0) which is
equivalent to

Value index = Laspeyres volume index *
Paasche price index/100

180 = 120 * 150/100

This shows that the volume and price effects of
value change are multiplicative
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Construction of a “family” of producer price
indices (Explicit deflators)

Consumer Price Index

A Producer Price Index for Agriculture

A Producer Price Index for Manufacturing

A Construction Price Index or index of prices of building
materials

A Retail price index

A Wage rate index

Export and Import price indices
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