Many studies, even some IMF papers, show and compare trade volumes across different years by directly using values in current dollars, rather than in constant dollars. But in this ways, inflation effect cannot be ruled out from the growth trend of trade. Here, I refer to those papers that simply do some descriptive research on trade, instead of doing econometric analysis or constructing trade index.
I really appreciate if anyone can tell me why those studies use trade volume in current dollars, instead of in constant dollars.
Many thanks!
Hi Piero,
Thank you very much. Actually I basically refer to those papers that simply do some descriptive research on trade, instead of doing econometric analysis or constructing trade index. For example, in the paper by Lall (2000), the table 3 in P345 shows trade values in 1985 and 1998 in current dollars, and the annual growth rate is also calculated based on these current values.
I believe Piero's answers are excellent. Most importantly, his third point. I may add that indexes with a different base can be logged without problem. Nevertheless, a good researcher should anticipate a reader's question and include a footnote for clarity. Good question and answer by Piero
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