RDP 9309: Alternative Concepts of the Real Exchange Rate: A Reconciliation Appendix: Data

All data series are quarterly and period averages where relevant. For most countries, data range from 1972:1 to 1992:3.

(a) Domestic Relative Prices

For Australia, the domestic relative price indices are calculated as in Dwyer (1992). Industries are classified as traded if at least 10 per cent of their total supply (total usage) is of exports (competing imports), as represented in the absorption matrix where competing imports are allocated to industries indirectly. The income based measure of GDP is then estimated for each industry and the traded and non-traded goods sectors as a whole. Weights (proportional to each industry's share of sectoral GDP) are applied to disaggregated price data to form price indices for traded and non-traded goods.

For the United States, Japan and Norway, the domestic relative price indices are calculated as the CPI divided by the simple average of the implicit price deflators for exports and imports.

For the Philippines, Pakistan and Korea, indices of unit values of exports and imports are used in place of implicit price deflators.

Source: ABS, Catalogue No. 5209.0, 5206.0, 5302.0 and 5211.0; ABS, unpublished producer prices and expenditure classes of the CPI; OECD, Main Economic Indicators; IMF, International Financial Statistics; Datastream, Country Sources.

(b) Deviations from PPP

For Australia, this is the Reserve Bank's real trade weighted index. Weights are proportional to the absolute value of trade between Australia and its 22 largest trading partners. The CPI is the measure of price.

For all other countries, the Morgan Guaranty real effective exchange rate is used. This is calculated similarly to the Reserve Bank measure for Australia. It is a real trade weighted exchange rate index with weights proportional to the absolute value of total trade between the domestic economy and a common group of 40 countries (18 industrialised and 22 developing). The wholesale price index of non-food manufactures is the measure of price.

Source: Reserve Bank of Australia; Morgan Guaranty, World Financial Markets.

(c) Terms of Trade

For Australia, the terms of trade is defined as the ratio of the implicit price deflators for exports and imports of goods and services, adjusted to exclude the prices of computers. For computer imports, the Standard Industrial Trade Classification categories 752 and 75997 are used. For computer exports, only the more general SITC division 75 was available and only from 1978:3.

For the United States, Japan and Norway, the terms of trade is measured as the ratio of the implicit price deflators for exports and imports of goods and services, but without adjustment for computers.

For the Philippines, Pakistan and Korea, indices of unit values of exports and imports are used in place of implicit price deflators.

Source: ABS Catalogue No. 5206.0 and 5302.0; Datastream, Country Sources.