[open-economics] Financial comparisons

[Niels Erik Kaaber Rasmussen]

Hi

On 2013-06-07 10:45, Tryggvi Björgvinsson wrote:
> Hi and thanks for the reply,
>
>  On fim 6.jún 2013 19:14, Niels Erik Kaaber Rasmussen wrote:
>
>> There are multiple official price-indexes all used by government in 
>> different contexts: consumer-price index, a wage index, netto-prices, 
>> an index for construction, for road constructions and so on. Parts of 
>> the budgets are grouped in similar ways. Fx. construction expenses are 
>> identifiable and these expenses could be adjusted using the 
>> construction-price-index (same goes for salaries, road-construction 
>> etc.). This could be a reasonable approach when focusing on a specific 
>> expenditure post in a historic perspective. However to use different 
>> price-indexes on different parts of the same budget is obviously 
>> problematic because the relative size of each type of expenditure 
>> changes over time.
>
>  This brings up another problem of what index to use. I think we can
> only infer that from some of our data (not the majority).
>
>> I choose to use a combined consumer-price and wage index to adjust 
>> the historical data. This is not perfect but I found it better than 
>> using multiple indexes for different parts of the budget and better 
>> than presenting figures in real values.
>
>  How do you combine them and what do you do when you don't have the
> indices for the years your looking at?

There was an existing official price-index base on a combination of 
consumer-prices and wages. As far as I know it is simply calculated as a 
weighted average of the consumer-price index and the wage-index.

>  I don't want to present the amounts in real values (but I want to
> store the real values in the database), I want to present them in
> "current nominal value" (what it would cost if I were paying for it
> with today's money).

The same I tried to accomplish in order to make comparisons (a little 
more) reasonable.

> The problem is that I don't have the data to
> compute the current nominal value (nor the data to compute the real
> value for all years).

I understand now that this is your main problem. In the Danish case I 
had all the data available. My main concerns was choosing the best 
price-index; how to deal with changes in accounting practices; what 
exactly to define as municipal-level expenses (vs. state-level); and how 
to deal with the fact that municipal responsibilities are changing over 
time.


/Niels Erik
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