Re: [Gretl-users] Correcting for inflation
On Fri, 10 Apr 2009, Raz Lev wrote:
I am trying to convert data to account for inflation.
I have an excel (or variable, whichever is better) with the
cumulative inflation for every quarter between 1980 and 1990 (my
period of interest) and in gretl data about salaries that
contain, amongst else, the wage, and the year and the quarter in
which the sample was taken.
The usual precedure for deflating a nominal variable is simply to
divide by a price index (with a possible scale factor to equate
the real and nominal values in a chosen base period). For
example, suppose I have nominal wage bill data and data on the
CPI:
wages CPI
1983:1 1629.5 98.0000
1983:2 1661.8 99.1333
1983:3 1699.0 100.1000
1983:4 1748.1 101.1000
1984:1 1794.0 102.5333
1984:2 1837.9 103.5000
1984:3 1877.3 104.4000
1984:4 1911.1 105.3000
Then I might choose a base period -- say, 1993:3, and do
genr realwages = wages * CPI[1983:3] / CPI
Allin