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Abstract:
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This paper presents a new methodology that combines Bureau of Labor Statistics Producer Price Index (PPI) and International Price Index (IPP) data to construct indexes that measure price changes for both domestically produced and imported inputs to production consumed by domestic industries. PPI currently publishes a set of industry input indexes, however, these indexes only include domestically produced inputs, thereby potentially excluding an important component of industry costs. The new methodology uses PPI data to measure price changes for industry purchases of domestically purchased inputs and IPP data are used to measure price changes for imported inputs. Bureau of Economic Analysis Input-Output (IO) data are used to determine the set of commodities a given industry consumes. Weights for the indexes are developed from both Bureau of Economic Analysis IO data and US Census revenue data. The paper also applies the methodology to the automobile manufacturing industry by developing an index measuring price changes for both domestically produced and imported inputs to the automobile industry.
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