0
$\begingroup$

I am using WB (country GDP) data in combination with UN Comtrade (bilateral trade) data. I need to divide bilateral trade by GDP so as to find out which % of a country's GDP comes from bilateral trade. The problem is WB has values in constant 2010 USD while UN Comtrade in current USD.

How can I transform the current USD values in constant 2010 USD values?

$\endgroup$
0
$\begingroup$

Use the World Bank data on US inflation to deflate the UN Comtrade dataset, so that it is also in constant prices.

Select Download, at the right side of the page, and you can get the dataset in csv or other formats.

To deflate the trade data, simply divide the values of bilateral trade by the value of each years CPI index, and then multiply them by the value of CPI in 2010 (the base year, which is 100 in this case). Alternatively, rebase the CPI index, by dividing all values by 100, so that CPI in 2010 is equal to 1. Then, divide the trade data by this new index. Both approaches are equivalent.

$\endgroup$
  • $\begingroup$ So, for example, for deflating US-Argentina bilateral trade for 2011, it should be: ( bilateral.trade.value.in.curr.USD(yr 2011) / CPI (yr 2011) ) * CPI(yr 2010) = bilateral.trade.value.in.const.2010.USD(yr 2011) ? Also which CPI index should I use? The Reporter's or the Partner's? In the example, the US' CPI or Argentina's? $\endgroup$ – Rafael Apr 20 '17 at 13:26
  • $\begingroup$ Yes, that is the formula. You have to use US CPI. $\endgroup$ – luchonacho Apr 20 '17 at 14:57
  • $\begingroup$ a quick follow-up: is this method standard for any trading dyad (for instance, China-Argetina)? Do they all go by US CPI simply because the reporting is done in USD? $\endgroup$ – Rafael May 15 '17 at 17:01
  • $\begingroup$ @Rafael I don't know if one or another method is "standard". The answer however might depend on what your objective is (which is not stated in the question). Can you elaborate? $\endgroup$ – luchonacho May 15 '17 at 17:11
  • $\begingroup$ I want to deflate to real values trade between several South American countries and their largest trading partners. So I have dyads for US and all South Americans countries, EU and S.Am. and China and S.Am. By your answer, I was in doubt whether using US CPI was recommended just for the US or if it is the approach for any trading dyad, as long as it is being reported in USD. $\endgroup$ – Rafael May 15 '17 at 17:22

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.