[open-economics] Financial comparisons

Fri Jun 7 15:19:26 UTC 2013

Hi Velichka!

On fös 7.jún 2013 10:01, Velichka Dimitrova wrote:
> I noticed there might be a confusion in terminology that you might want to
> avoid:

I'm probably messing everything up regarding terminology so thank you
for correcting me :)

> "Current prices" means always the price of the designated year or no change
> or nominal values

Hmm... I don't know what you mean by "no change".
My understanding is that nominal value is dependent on years and so I
can say "the nominal price for 2007" and mean: "What I pay if I were
using the money in 2007".

So I should use "current price" to denote the value of the amount as it
is today? ...and that's equivalent to "nominal value"?

> "Constant prices" means when you have chosen a base year - e.g. for
> deflating GDP the Penn World Table uses 2005 as the base year, i.e. all the
> data is expressed in terms of 2005

Ah... yes. This is what I'm searching for and what I mean by "real
value" (or almost).

So with this new terminology I can probably phrase my question better:

What I want to do in OpenSpending is to store the amount as constant
price so I can make comparisons based on the constant price, and then
compute the current price when presenting the amounts. With the data I
have I have these two questions:

1. How do I compute the constant price when I know the CPI for the year
I'm converting
2. What do I do when I want to compute the current price and I don't
know the current CPI?

Thanks Velichka. I hope I make more sense now.

-- 

Tryggvi Björgvinsson

Technical Lead, OpenSpending

The Open Knowledge Foundation <http://okfn.org>

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