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The German CIF/FOB Adjustment in Practice

The German CIF/FOB Adjustment in Practice. Simon Lohner. Content. Short review of the CIF/FOB Theory The German CIF/FOB Adjustment in Theory The German CIF/FOB Adjustment in Practice Some results Conclusion. Short review of the CIF/FOB Theory.

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The German CIF/FOB Adjustment in Practice

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  1. The German CIF/FOB Adjustment in Practice Simon Lohner The German CIF/FOB Adjustment in Practice

  2. Content • Short review of the CIF/FOB Theory • The German CIF/FOB Adjustment in Theory • The German CIF/FOB Adjustment in Practice • Some results • Conclusion The German CIF/FOB Adjustment in Practice

  3. Short review of the CIF/FOB Theory • BPM requires compilation of imports with the value of goods at the border of the exporting country (FOB). • FTS records the value of goods at the border of the importing country (CIF). • Therefore, reported data are not directly useable, an adjustment has to be made. • The adjustment comprises the transportation (and insurance) costs from the border of the exporting country to the border of the importing country. • Depending on the nationality of the transporter (only non-resident transporters are relevant for the BoP) the costs have to be booked as „transportation service“. The German CIF/FOB Adjustment in Practice

  4. Short review of the CIF/FOB Theory Country A Country B Country C 100 FOB:108 CIF:128 • Trade Statistic of Country C record value of import at border of Country C (CIF:128). • BOP of Country C records Trade in Goods at the border of Country A (FOB:108). • => adjustments in the goods account has to be made for the transportation costs thru country B (20). • 20 and 3 have to be (partly) transferred to the service account. 131 8 20 3 The German CIF/FOB Adjustment in Practice

  5. German CIF/FOB Adjustment in Theory Old CIF/FOB Adjustment (before 2008) • Until 1992 the German CIF/FOB adjustment used partly data available from the costumer reports. • After 1992 (establishment of European single market) these data were no longer available. • In 1992 calculation of the share of CIF/FOB adjustments of trade in goods for each country and mode of transport. • Using these shares for the upcoming CIF/FOB adjustment. • Shares became more and more out of date and did not reflect developments in the transportation sector => Therefore a new estimation procedure is needed. The German CIF/FOB Adjustment in Practice

  6. German CIF/FOB Adjustment in Theory New CIF/FOB Adjustment (after 2008) • The new system of CIF/FOB adjustment is a pure model (no reports needed). • General Idea: Calculating directly the costs for transportation depending on weight and prices. (How much does it actually cost to bring a container from USA to Germany by ship/plane?). • =>Calculation of individual transportation costs for each country and mode of transport. • Same procedure for the adjustment of trade and the compilation of the transport account. • (As this is a pure model and no reports are taken the transport costs for exports also have to be estimated in order to get a complete transport account!) The German CIF/FOB Adjustment in Practice

  7. New German CIF/FOB Adjustment Information needed Transportation Costs = Weight x Unit costs (subject to mode of transport, product characteristics (sea), distance) • Information: calculation of transportation costs geographical allocation for transport account The German CIF/FOB Adjustment in Practice

  8. New German CIF/FOB Adjustment Data Sources The German CIF/FOB Adjustment in Practice

  9. Excel tool presentation The German CIF/FOB Adjustment in Practice

  10. Impact of the change in the estimation procedure The German CIF/FOB Adjustment in Practice

  11. Geographical Breakdown of Transportation Services 2007 The German CIF/FOB Adjustment in Practice

  12. Share of Adjustment of the Imports The German CIF/FOB Adjustment in Practice

  13. Conclusion • + CIF/FOB estimation with a very close link to the transport sector. • + low costs for reporter and compiler. • + new information can be adopted easily. • + usually available in t+2 months. • + same general system for country of origin and country of consignment. • - restrictive assumptions needed for simplification and availability of data. The German CIF/FOB Adjustment in Practice

  14. THANK YOU FOR YOUR ATTENTION! • Contact information: Lohner Simon Deutsche Bundesbank Balance of Payments Statistic and International Investment Position Group Service and Transfers simon.lohner@bundesbank.de Phone: ++49-6131-377-8343 The German CIF/FOB Adjustment in Practice

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