These adjustments are crucial to estimating the real output of the U.S. economy as well as real consumption and real investment. Import and export price indexes have a number of additional uses, including measuring domestic inflation, studying long-term price trends, as inputs to forecasting future prices, as inputs into trade contracts and trade legislation, and in replacement cost accounting. Foreign sector price statistics are also valuable when doing various elasticity studies. Price and income elasticities can be calculated in conjunction with one another in order to distinguish how much of trade volume changes are attributable to price effects and how much to income effects. Price elasticities measure how the quantity traded responds to price changes as measured by the import and export price indexes.
Income elasticities measure how trade responds to changes in the real value of national income.
Another use of import and export price indexes is as an input to measuring U.S. industrial competitiveness. Different forms of economic competitiveness can be measured by calculating terms of trade indexes, deriving export price comparison ratios, or calculating import and export foreign currency indexes. Individual traders can look at the relevant import or export price index in their industry to compare how their price changes compare to average price changes. One final use for import and export price indexes is to analyze the effect of exchange rates on prices. Producing indexes used primarily as deflators, however, affects the interpretation of the indexes when used for other purposes.