§ Mr. Austin Mitchellasked the Secretary of State for Trade why his Department uses different weights from those used by the International Monetary Fund in calculating relative export prices and relative wholesale prices.
§ Mr. ParkinsonThe index of relative export prices compiled by my Department was developed for use by the Treasury for forecasting United Kingdom exports of manufactures. The weights used are appropriate to their forecasting model and reflect solely competition from exports for a given level of world trade. The same weights are used for the index of relative wholesale prices.
The weights used in the IMF indices are based on a slightly different model in which account is taken of competition from both exports and domestic production and of assumed differences in price elasticities of demand for different countries' exports in different markets. The IMF also uses a larger number of competitor countries in compiling its indices.