How do unit value indexes differ from the Import/Export Price Indexes?
A unit value index measures the change in the value of items regardless of whether the items are homogeneous and, therefore, can be affected by changes in the mix of items as well as changes in their prices. In contrast, a price index reflects an average of the proportionate changes in the prices of a specified set of items. A disadvantage of a unit value index is that it reflects changes in the product mix at the finest level of detail independent of price change. For instance, a unit value index would decrease in the case of a shift from luxury cars to economy cars within a product category, even when all the prices for each item remained constant. In addition, unit value indexes do not take into account changes in a product s specification. For instance, adding passenger side air bags to a car would cause the unit value index to increase. A price index, however, controls for changes in product specifications and would not increase in this instance. Because of the limitations mention
