In This Chapter

Chapter 15.
International Price Indexes

The objective of the International Price Program sample design is to provide an unbiased measure of price change in each published index. A multistage design is used to select up-to-date specific import and export items that can be priced over time. The first stage selects establishments independently within each broad product category (stratum); an establishment can be selected in more than one category. The second stage selects detailed product categories within each establishment/stratum pair and is designed to support all of the IPP classification systems (described in the Publications section of this chapter). Each pair can be sampled multiple times, allowing for more quotes to be selected from detailed product categories with larger proportions of the stratum value traded by the establishment. Subsequent stages of subselection are conducted until a unique item that can be priced over time is achieved. The first two stages are completed at BLS using the appropriate sampling frame, and the final stages take place during the interview with the respondent.

The sample design is responsive to the constraints of both cost and respondent burden. Budget constraints determine the maximum number of establishments selected in a sample, and respondent burden limits2 control the number of items priced by each establishment.

Unfortunately, the majority of detailed product categories sampled in the second stage do not contain items that are traded frequently enough to be consistently priced over time. IPP receives initial price data for approximately 40 percent of the sampled establishment/detailed categories.

The earliest IPP samples were based on judgmental selection of establishments and items whose price movement was considered representative of the respondent's other items in the same detailed product category. IPP began using a probability sampling technique3 for the first two stages in 1976 and for the subsequent stages in 1982. In order to maximize productivity, efforts are made to ensure that frequent traders make up 95 to 99 percent of each sample.

Starting in 1989, IPP divided the import and export merchandise universes into halves. Samples for one import half and one export half are fielded each year, so both universes are fully re-sampled every 2 years. The sampled products are priced for approximately 5 years until they are replaced by a fresh sample of the same half-universe. Generally, each index is composed of two samples.

As of 1991 a selected item can be represented in the indexes up to 10 times per sample, an increase from a maximum of two times for older samples. This allows items with larger shares of the detailed product category to have more weight in the indexes and reduces the number of items for which the respondent needs to provide monthly prices.

2Burden limits are usually determined by the establishment's relative size, diversity, and consistency of trade in the stratum. These assignments, however, can be negotiated with the respondent.
3The technique used is commonly known as a systematic probability proportionate to size design.

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