Introduction

This paper gives a general description of the revised version of the world trade model that is currently in use in the Research Department of the International Monetary Fund, both in research applications and as an input into the world economic outlook forecasting exercise.¹ The paper describes the economic structure of the model and emphasizes the revisions that have been made since the previous description of the model.² The discussion concentrates on the price and volume equations for trade in manufactures between the 14 industrial countries. It is this group of equations that dominates the overall behavior of the model, and it is here that the most significant revisions have been made.³

The world trade model attempts to explain the volumes and unit values of merchandise exports and imports for the 14 largest industrial countries and for 4 aggregate regions making up the rest of the world (Table 1). The model is not a world macromodel along the lines of that developed under Project LINK.⁴ In particular, it does not attempt to explain the major national macro-economic aggregates; rather, it takes rates of domestic inflation and real domestic demand growth as given and attempts to generate a set of aggregate trade flows, both in value and volume terms, that are consistent with these domestic variables.

Table 1.

Summary of Model Specification

¹According to Standard International Trade Classification.

Table 1.

Summary of Model Specification

Geographic Disaggregation		Commodity Disaggregation1		Endogenous Variables		Exogenous Variables
industrial countries		SITC 0+1: Agricultural		Import volumes by commodity		Real domestic demand for
	Austria		goods		class, by country		manufactures, by country
	Belgium-Luxembourg	SITC 2 + 4: Raw materials		Export volumes by commodity		Real personal consumption
	Canada	SITC 3: Fuels			class, by country		expenditure, by country
	Denmark	SITC 5-8: Manufactures		Export volumes of automobiles		Potential output in manufacturing,
	France				between the		by country
	Germany, Fed. Rep. of				United States and Canada	Exchange rates, by country
	Italy			Import unit values by commodity		Fuel prices
	Japan				class (excluding fuels),	Implicit GNP deflators, by
	Netherlands				by country		country
	Norway			Export unit values by commodity		Hourly earnings in manufacturing,
	Sweden				class (excluding fuels),		by country
	Switzerland				by country	Output per man-hour in manufacturing,
	United Kingdom			Domestic wholesale prices of			by country
	United States				manufactures, by country	Potential man-hours of employment
				Domestic wholesale prices of			in manufacturing,
Regions					raw materials, by country		by country
	Developed primary producing			Total import volumes, by		Spot prices for 35 non-oil
	countries				region		commodities
	Major oil exporting countries			Total export volumes, by
	Centrally planned economies				region
	Non-oil developing countries			Total import unit values, by
					region
				Total export unit values, by
					region

¹According to Standard International Trade Classification.

View Table

Table 1.

Summary of Model Specification

Geographic Disaggregation		Commodity Disaggregation1		Endogenous Variables		Exogenous Variables
industrial countries		SITC 0+1: Agricultural		Import volumes by commodity		Real domestic demand for
	Austria		goods		class, by country		manufactures, by country
	Belgium-Luxembourg	SITC 2 + 4: Raw materials		Export volumes by commodity		Real personal consumption
	Canada	SITC 3: Fuels			class, by country		expenditure, by country
	Denmark	SITC 5-8: Manufactures		Export volumes of automobiles		Potential output in manufacturing,
	France				between the		by country
	Germany, Fed. Rep. of				United States and Canada	Exchange rates, by country
	Italy			Import unit values by commodity		Fuel prices
	Japan				class (excluding fuels),	Implicit GNP deflators, by
	Netherlands				by country		country
	Norway			Export unit values by commodity		Hourly earnings in manufacturing,
	Sweden				class (excluding fuels),		by country
	Switzerland				by country	Output per man-hour in manufacturing,
	United Kingdom			Domestic wholesale prices of			by country
	United States				manufactures, by country	Potential man-hours of employment
				Domestic wholesale prices of			in manufacturing,
Regions					raw materials, by country		by country
	Developed primary producing			Total import volumes, by		Spot prices for 35 non-oil
	countries				region		commodities
	Major oil exporting countries			Total export volumes, by
	Centrally planned economies				region
	Non-oil developing countries			Total import unit values, by
					region
				Total export unit values, by
					region

¹According to Standard International Trade Classification.

As shown in Table 1, the main exogenous inputs into the model include, for each industrial country, the major components of real domestic demand, hourly earnings in manufacturing, the gross national product deflator, the nominal exchange rate, and potential output and employment (in terms of man-hours) in manufacturing. The U.S. dollar prices of petroleum products and a wide range of other primary commodities also enter the model exogenously. Taking these variables as given, the model then generates estimates of the trade volume and unit value variables on a semiannual basis for each country and for four broad commodity classifications. In a forecasting context, these estimates are bench-marked on alternative sets of historical data to give projected levels of volumes and values of total merchandise trade on both a customs and a balance of payments basis. Disaggregated trade flows under the four commodity classifications are provided solely on a customs basis.

The sets of endogenous and exogenous variables in the present version of the model, as shown in Table 1, are not identical to those described in the Deppler-Ripley paper (p. 150). For example, the previous model contained equations that attempted to explain the volume of fuel exports of industrial countries; some obvious difficulties in this area led to the elimination of these equations, and fuel exports are now taken as exogenous.⁵ On the other hand, a number of variables that were previously assumed exogenous are now determined within the model. These include domestic wholesale prices for both manufactures and raw materials in the industrial countries and the volume of trade in automobiles between Canada and the United States. The inclusion of equations to determine domestic wholesale prices allows the set of variables exogenous to the industrial country prices block to be reduced to only unit labor cost and commodity price variables, while the U.S.-Canada auto trade equations contribute to an improvement in the model’s explanation of the aggregate levels of U.S. and Canadian exports and imports of manufactures.

After the various structural modifications were introduced, all of the equations of the model were re-estimated on a sample of semiannual data extending from the beginning of 1962 through the second half of 1979. This involved a seven-semester extension of the sample used in the previous version of the model, introducing data for the three and a half years from the second half of 1976 through the second half of 1979. Extension of the sample to cover this period brought in observations representing an additional cyclical expansion of demand in industrial countries and a corresponding expansion in the volume of world trade. Furthermore, the extension of the sample provides additional quantitative information on the longer-term effects of the first oil shock and of the initial impact of the second oil shock, thus offering scope for more precise estimation of the model’s trade price elasticities. The equations of the new version of the model were estimated singly, using either ordinary least squares or instrumental variable techniques. In several equations, coefficients were estimated subject to a priori linear restrictions. In particular, compared with the previous version of the model, greater use was made of prior information in the equations specifying the behavior of export and import unit values for manufactures. Finally, in estimating the lagged effects of relative prices on trade volumes, a more flexible scheme of distributed lag restrictions was adopted.

The discussion of the model is divided into two sections, corresponding to the two main blocks of equations: industrial country price equations and industrial country volume equations. The general functional forms of the equations for trade in manufactures in each block are presented in Tables 2 and 3, while country-by-country coefficient estimates are set out separately in Tables 4 through 11. For each block, both the general descriptions and the algebraic functional forms describe structural equations for a single country (i), with foreign variables constructed using the partner-country index (j). Detailed descriptions are not given for equations explaining unit values and trade volumes of nonmanufactured commodities, nor for equations explaining the total trade of the four regions. These equations are not substantially different from those adopted by Deppler and Ripley; details of functional forms and updated estimates are given in Spencer (1984).

Table 2.

World Trade Model: Specification of Price Equations for Trade in Manufactures by Countryi

(i = 1 to 14, and all summations are from 1 to 14)

¹Endogenous variables are listed in order of appearance in the equation set; exogenous variables are listed alphabetically.

Table 2.

World Trade Model: Specification of Price Equations for Trade in Manufactures by Countryi

(i = 1 to 14, and all summations are from 1 to 14)

$\begin{array}{ccc}\left(1\right)& \mathrm{\Delta ln}XP{M}_i=& a_1\mathrm{\Delta }\text{ln}PR{M}_i+a_2\mathrm{\Delta }\text{ln}NUL{C}_i\hfill \\ \hfill & \hfill & +a_3\mathrm{\Delta }\text{ln}(POIL\cdot LC{D}_i)+a_4\mathrm{\Delta }\text{ln}(PF{X}_i\cdot LC{D}_i)\hfill \\ \hfill & \hfill & +a_5\text{ln}(NUL{C}_i/UL{C}_i)\hfill \end{array}$
	$\begin{array}{cc}\text{Restrictions:}& \left(1.1\right)a_1+a_2+a_3+a_4=1\hfill \\ & \left(1.2\right)a_1=r_i^1\cdot a_2\hfill \\ & \left(1.3\right)a_3=r_i^2\cdot a_2\hfill \end{array}$
$\begin{array}{cc}\left(1\text{a}\right)& \text{ln}PF{X}_i=\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}\underset{k\ne i}{\mathrm{\Sigma }}\frac{sm{m}_{kj}}{1-sm{m}_{ij}}\text{ln}(XP{M}_k/LC{D}_k)\end{array}$
$\begin{array}{cc}\left(2\right)& \mathrm{\Delta }\text{ln}MP{M}_i=b_1\mathrm{\Delta }\text{ln}(PFM{D}_i\cdot LC{D}_i)\end{array}$
	Restriction: (2.1) b1 = 1
$\begin{array}{cc}\left(2\text{a}\right)& \text{ln}PFM{D}_i=\underset{j}{\mathrm{\Sigma }}sm{m}_{ji}\text{ln}(XP{M}_j/LC{D}_j)\end{array}$
$\begin{array}{ccc}\left(3\right)& \mathrm{\Delta }\text{ln}P{M}_i=& c_1\mathrm{\Delta }\ln MP{M}_i+c_2\mathrm{\Delta }\ln PR{M}_i+c_3\mathrm{\Delta }\ln NUL{C}_i\\ & & c_4\mathrm{\Delta }\ln (POIL\cdot LC{D}_i)+c_5\mathrm{\Delta }\ln XP{M}_i+c_6\mathrm{\Delta }\ln {\left(P{M}_i\right)}_{-1}\end{array}$
	Restriction: (3.1) C1 + C2 + C3 + C4 + C5 + C6 = 1
Definition of Variables1
Variables endogenous to the price equations
XPMi	Index of export unit values of manufactured goods from country i, expressed in the currency of country i, 1970 = 100.
PFXi	Double-weighted index reflecting an average of competitor countries’ export prices for manufactures in U.S. dollars.
MPMi	Index of import unit values of manufactures in country i, expressed in the currency of country i, 1970 = 100.
PFMDi	Average of partner-country export unit value indices for manufactures in U.S. dollars.
PMi	Index of wholesale price of manufactures in country i, in the currency of country i, 1970 = 100.
Variables exogenous to the price equations
(Variables exogenous to the manufacturing price block but endogenous to the model are indicated by an asterisk.)
LCDi	Exchange rate variable for country i, calculated as the number of currency units of country i per U.S. dollar, expressed in index form, 1970 = 100.
NOMHi	Normal output per man-hour in manufacturing, in country i.
NULCi	Normal unit labor costs in manufacturing, WMi/NOMHi, in country i, expressed in the currency of country i, 1970 = 100.
OMHi	Output per man-hour in manufacturing, in country i.
POIL	Average oil export unit value of the oil exporting countries, in U.S. dollars, 1980 = 100.
$PR{M}_i^{*}$	Index of domestic costs of raw materials in country i, in the currency of country i, 1970 = 100.
$r_i^1$	Ratio of raw material to labor inputs in gross manufacturing output, in country i, based on 1970 input-output weights.
$r_i^2$	Ratio of fuel to labor inputs in gross manufacturing output, in country i, based on 1970 input-output weights.
smmij	Share of manufactured imports from industrial countries in market j originating in country i, in value terms, in 1970.
smxij	Share of manufactured exports of country i going to market j, in value terms, in 1970.
ULCi	Unit labor costs in manufacturing, WMi/OMHi, in country i, in the currency of country i, 1970 = 100.
WMi	Index of compensation per man-hour in manufacturing in country i, expressed in the currency of country i, 1970 = 100.

¹Endogenous variables are listed in order of appearance in the equation set; exogenous variables are listed alphabetically.

View Table

Table 2.

World Trade Model: Specification of Price Equations for Trade in Manufactures by Countryi

(i = 1 to 14, and all summations are from 1 to 14)

$\begin{array}{ccc}\left(1\right)& \mathrm{\Delta ln}XP{M}_i=& a_1\mathrm{\Delta }\text{ln}PR{M}_i+a_2\mathrm{\Delta }\text{ln}NUL{C}_i\hfill \\ \hfill & \hfill & +a_3\mathrm{\Delta }\text{ln}(POIL\cdot LC{D}_i)+a_4\mathrm{\Delta }\text{ln}(PF{X}_i\cdot LC{D}_i)\hfill \\ \hfill & \hfill & +a_5\text{ln}(NUL{C}_i/UL{C}_i)\hfill \end{array}$
	$\begin{array}{cc}\text{Restrictions:}& \left(1.1\right)a_1+a_2+a_3+a_4=1\hfill \\ & \left(1.2\right)a_1=r_i^1\cdot a_2\hfill \\ & \left(1.3\right)a_3=r_i^2\cdot a_2\hfill \end{array}$
$\begin{array}{cc}\left(1\text{a}\right)& \text{ln}PF{X}_i=\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}\underset{k\ne i}{\mathrm{\Sigma }}\frac{sm{m}_{kj}}{1-sm{m}_{ij}}\text{ln}(XP{M}_k/LC{D}_k)\end{array}$
$\begin{array}{cc}\left(2\right)& \mathrm{\Delta }\text{ln}MP{M}_i=b_1\mathrm{\Delta }\text{ln}(PFM{D}_i\cdot LC{D}_i)\end{array}$
	Restriction: (2.1) b1 = 1
$\begin{array}{cc}\left(2\text{a}\right)& \text{ln}PFM{D}_i=\underset{j}{\mathrm{\Sigma }}sm{m}_{ji}\text{ln}(XP{M}_j/LC{D}_j)\end{array}$
$\begin{array}{ccc}\left(3\right)& \mathrm{\Delta }\text{ln}P{M}_i=& c_1\mathrm{\Delta }\ln MP{M}_i+c_2\mathrm{\Delta }\ln PR{M}_i+c_3\mathrm{\Delta }\ln NUL{C}_i\\ & & c_4\mathrm{\Delta }\ln (POIL\cdot LC{D}_i)+c_5\mathrm{\Delta }\ln XP{M}_i+c_6\mathrm{\Delta }\ln {\left(P{M}_i\right)}_{-1}\end{array}$
	Restriction: (3.1) C1 + C2 + C3 + C4 + C5 + C6 = 1
Definition of Variables1
Variables endogenous to the price equations
XPMi	Index of export unit values of manufactured goods from country i, expressed in the currency of country i, 1970 = 100.
PFXi	Double-weighted index reflecting an average of competitor countries’ export prices for manufactures in U.S. dollars.
MPMi	Index of import unit values of manufactures in country i, expressed in the currency of country i, 1970 = 100.
PFMDi	Average of partner-country export unit value indices for manufactures in U.S. dollars.
PMi	Index of wholesale price of manufactures in country i, in the currency of country i, 1970 = 100.
Variables exogenous to the price equations
(Variables exogenous to the manufacturing price block but endogenous to the model are indicated by an asterisk.)
LCDi	Exchange rate variable for country i, calculated as the number of currency units of country i per U.S. dollar, expressed in index form, 1970 = 100.
NOMHi	Normal output per man-hour in manufacturing, in country i.
NULCi	Normal unit labor costs in manufacturing, WMi/NOMHi, in country i, expressed in the currency of country i, 1970 = 100.
OMHi	Output per man-hour in manufacturing, in country i.
POIL	Average oil export unit value of the oil exporting countries, in U.S. dollars, 1980 = 100.
$PR{M}_i^{*}$	Index of domestic costs of raw materials in country i, in the currency of country i, 1970 = 100.
$r_i^1$	Ratio of raw material to labor inputs in gross manufacturing output, in country i, based on 1970 input-output weights.
$r_i^2$	Ratio of fuel to labor inputs in gross manufacturing output, in country i, based on 1970 input-output weights.
smmij	Share of manufactured imports from industrial countries in market j originating in country i, in value terms, in 1970.
smxij	Share of manufactured exports of country i going to market j, in value terms, in 1970.
ULCi	Unit labor costs in manufacturing, WMi/OMHi, in country i, in the currency of country i, 1970 = 100.
WMi	Index of compensation per man-hour in manufacturing in country i, expressed in the currency of country i, 1970 = 100.

¹Endogenous variables are listed in order of appearance in the equation set; exogenous variables are listed alphabetically.

Table 3.

World Trade Model: Specification of Volume Equations for Trade in Manufactures for Countryi

(i = 1 to 14, and all summations are from 1 to 14)

¹Variables endogenous to the volume equations are listed in order of appearance in the equation set; exogenous variables are listed alphabetically.

Table 3.

World Trade Model: Specification of Volume Equations for Trade in Manufactures for Countryi

(i = 1 to 14, and all summations are from 1 to 14)

$\begin{array}{cc}\left(4\right)& \text{ln}MV{M}_i=a_0+a_1\ln (AV{G}_i/QM{T}_i)+a_2\text{ln}QM{T}_i+a_3\left(RMP{M}_i\right)\end{array}$
	Restriction: a2 = 1
$\begin{array}{cc}\left(5\right)& \text{ln X}V{M}_i=b_0+b_1\ln F{M}_i+b_2\text{ln}RQM{T}_i+b_3\text{ln}RXP{M}_i+b_4\text{ln}RXC{U}_i\end{array}$
	Restriction: b2 = 1
$\begin{array}{cc}\left(5\text{a}\right)& F{M}_i=\underset{j}{\mathrm{\Sigma }}sm{m}_{ij}\cdot MV{M}_j\cdot M_j\end{array}$
Definition of Variables1
Variables endogenous to the volume equations
MVMi	Import volume of manufactures for country i.
XVMi	Export volume of manufactures for country i.
FMi	Foreign market variable for manufactured exports from country i.
Variables exogenous to the volume equations
(Variables exogenous to the volume equations but endogenous to the model are marked with an asterisk.)
$AV{G}_i^{*}$	Weighted average of output in manufacturing (QMi) and real final domestic demand for manufactures (DVMt) both in index form, 1970 = 100, with the weights reflecting the share of manufactured imports going to intermediate and final demand, respectively.
	AVGi = (1 − SHi) · QMi + SHi · DVMi
Mi	Share of country i’s imports of manufactured goods coming from the industrial countries, in value terms, in 1970.
$MP{M}_i^{*}$	Index of import unit values of manufactures in country i, expressed in the currency of country i, 1970 = 100 (cf. equation (2) in Table 2).
$P{M}_i^{*}$	Index of wholesale price of manufactures in country i, in the currency of country i, 1970 = 100 (cf. equation (3) of Table 2).
QMi	Index of real value added in manufacturing in country i, 1970 = 100.
QMTi	Index of potential output in manufacturing in country i.
$RMP{M}_i^{*}$	Index of domestic prices of manufactures relative to import price of manufactures. This index is calculated as
	RMPMi = PMi/MPMi
RQMTi	Index of potential output in manufacturing in country i relative to competitors’ potential output in manufacturing.
	$\text{ln}RQM{T}_i=\text{ln}QM{T}_i-\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}\cdot \underset{k}{\mathrm{\Sigma }}sm{m}_{kj}\cdot \text{ln}QM{T}_k$
$RXC{U}_i^{*}$	Average measure of capacity utilization in countries importing from country i, calculated as
	$RXC{U}_i=\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}{X}_i\cdot Q{M}_j/QM{T}_j$
	where Xi is the share of country i’s exports going to industrial countries, in value terms, in 1970.
$RMP{M}_i^{*}$	Index of export unit values of manufactures in country i relative to competitors’ price index.
	$\text{ln}\left(RXP{M}_i\right)=\text{ln}(XP{M}_i/LC{D}_i)-\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}\cdot \text{ln}\left(PFM{D}_j\right)$
smmij	Share of manufactured imports from industrial countries in market j originating in country i, in value terms, in 1970.
smxij	Share of manufactured exports from country i to market j, in value terms, in 1970.

¹Variables endogenous to the volume equations are listed in order of appearance in the equation set; exogenous variables are listed alphabetically.

View Table

Table 3.

World Trade Model: Specification of Volume Equations for Trade in Manufactures for Countryi

(i = 1 to 14, and all summations are from 1 to 14)

$\begin{array}{cc}\left(4\right)& \text{ln}MV{M}_i=a_0+a_1\ln (AV{G}_i/QM{T}_i)+a_2\text{ln}QM{T}_i+a_3\left(RMP{M}_i\right)\end{array}$
	Restriction: a2 = 1
$\begin{array}{cc}\left(5\right)& \text{ln X}V{M}_i=b_0+b_1\ln F{M}_i+b_2\text{ln}RQM{T}_i+b_3\text{ln}RXP{M}_i+b_4\text{ln}RXC{U}_i\end{array}$
	Restriction: b2 = 1
$\begin{array}{cc}\left(5\text{a}\right)& F{M}_i=\underset{j}{\mathrm{\Sigma }}sm{m}_{ij}\cdot MV{M}_j\cdot M_j\end{array}$
Definition of Variables1
Variables endogenous to the volume equations
MVMi	Import volume of manufactures for country i.
XVMi	Export volume of manufactures for country i.
FMi	Foreign market variable for manufactured exports from country i.
Variables exogenous to the volume equations
(Variables exogenous to the volume equations but endogenous to the model are marked with an asterisk.)
$AV{G}_i^{*}$	Weighted average of output in manufacturing (QMi) and real final domestic demand for manufactures (DVMt) both in index form, 1970 = 100, with the weights reflecting the share of manufactured imports going to intermediate and final demand, respectively.
	AVGi = (1 − SHi) · QMi + SHi · DVMi
Mi	Share of country i’s imports of manufactured goods coming from the industrial countries, in value terms, in 1970.
$MP{M}_i^{*}$	Index of import unit values of manufactures in country i, expressed in the currency of country i, 1970 = 100 (cf. equation (2) in Table 2).
$P{M}_i^{*}$	Index of wholesale price of manufactures in country i, in the currency of country i, 1970 = 100 (cf. equation (3) of Table 2).
QMi	Index of real value added in manufacturing in country i, 1970 = 100.
QMTi	Index of potential output in manufacturing in country i.
$RMP{M}_i^{*}$	Index of domestic prices of manufactures relative to import price of manufactures. This index is calculated as
	RMPMi = PMi/MPMi
RQMTi	Index of potential output in manufacturing in country i relative to competitors’ potential output in manufacturing.
	$\text{ln}RQM{T}_i=\text{ln}QM{T}_i-\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}\cdot \underset{k}{\mathrm{\Sigma }}sm{m}_{kj}\cdot \text{ln}QM{T}_k$
$RXC{U}_i^{*}$	Average measure of capacity utilization in countries importing from country i, calculated as
	$RXC{U}_i=\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}{X}_i\cdot Q{M}_j/QM{T}_j$
	where Xi is the share of country i’s exports going to industrial countries, in value terms, in 1970.
$RMP{M}_i^{*}$	Index of export unit values of manufactures in country i relative to competitors’ price index.
	$\text{ln}\left(RXP{M}_i\right)=\text{ln}(XP{M}_i/LC{D}_i)-\underset{j}{\mathrm{\Sigma }}sm{x}_{ij}\cdot \text{ln}\left(PFM{D}_j\right)$
smmij	Share of manufactured imports from industrial countries in market j originating in country i, in value terms, in 1970.
smxij	Share of manufactured exports from country i to market j, in value terms, in 1970.

¹Variables endogenous to the volume equations are listed in order of appearance in the equation set; exogenous variables are listed alphabetically.

Table 4.

Fourteen Industrial Countries: Estimates of Export Unit Value Equations for Manufactures, Second Half 1962-Second Half 1979¹

¹See Table 2, equation (1). The f-statistics are in parentheses. The tabulated estimates may differ slightly from the parameters used in the current forecasting version of the model.

²The exact algebraic form of the equations and the variable definitions are given in Table 2. All variables are log first differences.

³As a result of coefficient restrictions imposed on these equations, ${\overline{R}}^2$ gives the proportion of explained variation in the difference between the rate of change in XPM and the rate of change in competitor prices.

Table 4.

Fourteen Industrial Countries: Estimates of Export Unit Value Equations for Manufactures, Second Half 1962-Second Half 1979¹

Explanatory Variable2		Austria	Belgium-Luxembourg	Canada	Denmark	France	Fed. Rep. of Germany	Italy	Japan	Netherlands	Norway	Sweden	Switzerland	United Kingdom	United States
Domestic raw		0.029	0.052	0.032	0.066	0.069	0.069	0.029	0.034	0.090	0.017	0.013	0.093	0.033	0.023
	material prices	(1.42)	(2.89)	(2.27)	(4.48)	(8.03)	(5.36)	(2.85)	(5.62)	(5.71)	(2.11)	(5.19)	(6.51)	(3.60)	(7.86)
Normal unit		0.115	0.289	0.243	0.463	0.267	0.257	0.353	0.401		0.278		0.348	0.131	0.665
	labor costs	(1.42)	(2.89)	(2.27)	(4.48)	(8.03)	(5.36)	(2.85)	(5.62)		(2.11)		(6.51)	(3.60)	(7.86)
Normal unit										0.405		0.329
	labor costs (−1)									(5.71)		(5.19)
Energy price		0.030	0.063		0.026		0.068		0.160	0.067	0.052	0.081			0.051
		(1.42)	(2.89)		(1.88)		(5.36)		(5.62)	(2.94)	(2.11)	(5.19)			(2.62)
Energy price (−1)				0.053	0.033	0.104		0.045		0.041			0.096	0.052	0.056
				(2.27)	(2.36)	(8.03)		(2.85)		(2.19)			(6.51)	(3.60)	(2.85)
Competitor prices		0.218	0.225	0.672	0.413	0.561	0.212	0.245	0.405	0.397		0.307	0.464	0.439	0.204
		(1.02)	(1.01)	(4.66)	(3.15)	(10.24)	(2.10)	(2.23)	(3.83)	(3.76)		(3.50)	(5.63)	(3.32)	(2.02)
Competitor		0.608	0.371				0.394	0.329			0.653	0.271		0.346
	prices (−1)	(3.80)	(2.20)				(6.22)	(2.91)			(3.97)	(3.41)		(6.81)
Cyclical unit							−0.248
	labor costs						(1.51)
Seasonal dummy								−0.013		−0.010
								(2.25)		(2.27)
Rho											0.286		0.335	0.698
											(1.68)		(1.94)	(5.10)
SEE		0.025	0.019	0.026	0.014	0.016	0.013	0.022	0.027	0.017	0.031	0.014	0.022	0.013	0.017
${\overline{R}}^2$3		0.28	0.24	0.11	0.34	0.64	0.65	0.59	0.47	0.46	0.09	0.64	0.55	0.81	0.63
D-W		2.48	2.00	1.89	2.24	1.89	1.72	2.15	1.87	1.46	1.87	1.90	1.69	1.81	1.86

¹See Table 2, equation (1). The f-statistics are in parentheses. The tabulated estimates may differ slightly from the parameters used in the current forecasting version of the model.

²The exact algebraic form of the equations and the variable definitions are given in Table 2. All variables are log first differences.

³As a result of coefficient restrictions imposed on these equations, ${\overline{R}}^2$ gives the proportion of explained variation in the difference between the rate of change in XPM and the rate of change in competitor prices.

View Table

Table 4.

Fourteen Industrial Countries: Estimates of Export Unit Value Equations for Manufactures, Second Half 1962-Second Half 1979¹

Explanatory Variable2		Austria	Belgium-Luxembourg	Canada	Denmark	France	Fed. Rep. of Germany	Italy	Japan	Netherlands	Norway	Sweden	Switzerland	United Kingdom	United States
Domestic raw		0.029	0.052	0.032	0.066	0.069	0.069	0.029	0.034	0.090	0.017	0.013	0.093	0.033	0.023
	material prices	(1.42)	(2.89)	(2.27)	(4.48)	(8.03)	(5.36)	(2.85)	(5.62)	(5.71)	(2.11)	(5.19)	(6.51)	(3.60)	(7.86)
Normal unit		0.115	0.289	0.243	0.463	0.267	0.257	0.353	0.401		0.278		0.348	0.131	0.665
	labor costs	(1.42)	(2.89)	(2.27)	(4.48)	(8.03)	(5.36)	(2.85)	(5.62)		(2.11)		(6.51)	(3.60)	(7.86)
Normal unit										0.405		0.329
	labor costs (−1)									(5.71)		(5.19)
Energy price		0.030	0.063		0.026		0.068		0.160	0.067	0.052	0.081			0.051
		(1.42)	(2.89)		(1.88)		(5.36)		(5.62)	(2.94)	(2.11)	(5.19)			(2.62)
Energy price (−1)				0.053	0.033	0.104		0.045		0.041			0.096	0.052	0.056
				(2.27)	(2.36)	(8.03)		(2.85)		(2.19)			(6.51)	(3.60)	(2.85)
Competitor prices		0.218	0.225	0.672	0.413	0.561	0.212	0.245	0.405	0.397		0.307	0.464	0.439	0.204
		(1.02)	(1.01)	(4.66)	(3.15)	(10.24)	(2.10)	(2.23)	(3.83)	(3.76)		(3.50)	(5.63)	(3.32)	(2.02)
Competitor		0.608	0.371				0.394	0.329			0.653	0.271		0.346
	prices (−1)	(3.80)	(2.20)				(6.22)	(2.91)			(3.97)	(3.41)		(6.81)
Cyclical unit							−0.248
	labor costs						(1.51)
Seasonal dummy								−0.013		−0.010
								(2.25)		(2.27)
Rho											0.286		0.335	0.698
											(1.68)		(1.94)	(5.10)
SEE		0.025	0.019	0.026	0.014	0.016	0.013	0.022	0.027	0.017	0.031	0.014	0.022	0.013	0.017
${\overline{R}}^2$3		0.28	0.24	0.11	0.34	0.64	0.65	0.59	0.47	0.46	0.09	0.64	0.55	0.81	0.63
D-W		2.48	2.00	1.89	2.24	1.89	1.72	2.15	1.87	1.46	1.87	1.90	1.69	1.81	1.86

¹See Table 2, equation (1). The f-statistics are in parentheses. The tabulated estimates may differ slightly from the parameters used in the current forecasting version of the model.

²The exact algebraic form of the equations and the variable definitions are given in Table 2. All variables are log first differences.

³As a result of coefficient restrictions imposed on these equations, ${\overline{R}}^2$ gives the proportion of explained variation in the difference between the rate of change in XPM and the rate of change in competitor prices.