# Formula for constant dollars

Posted by Arthur Bowman on December 29, 2000 2:39 PM

I'm doing a trends analysis based on the real dollar numbers, the same numbers but based on inflation, and the same numbers but in constant dollars. I'm not sure I know the formula for constant dollars.

My starting point is \$674 in 1990. The following years are: \$699 ('91), \$721 ('92), \$770 ('93), \$792 ('94), \$830 ('95), \$868 ('96), \$936 ('97), \$996 (98) and \$1,071 ('99).

To report inflated dollars, I begin with \$674 in 1990 and multiply it by to total inflation over the reporting period. Therefore, the inflated dollars are: \$674 ('90), \$702.3 ('91), \$723.4 ('92), \$742.9 ('93), \$763 ('94), \$782 ('95), \$804.7 ('96), \$823.2 ('97), \$836.4 (98) and \$858.1 ('99).

How do I figure constant dollars? I've been told by one person that real dollas divided by total inflation equals constant dollars, but I'd like a second opinion. Any thoughts?

thanks,
bowman

Posted by Anonymous on December 29, 2000 5:56 PM

The person giving you advice is correct.