The Problem of Calculating the Price Index of Terms of Trade and its Solution

In China,scholars generally obtain widely divergent results when they calculate the price index of China's terms of trade based on Paasche aggregative formula.This problem was attributed to the data imperfection of customs' statistical information.Therefore,in this paper,a and two-step method is introduced to calculate the price index of terms of trade.Firstly,based on Paasche aggregative formula,every period's price index of import and export is calculated with the chain-based method compared with its last period's.Secondly,the price index of import and export is calculated with the constant-based method compared with the benchmark period.Then,with the benchmark period's export price index divided by the import price index,the price index of terms of trade is obtained,which could be a practicable solution to the problem.