Convert a money series to constant prices

A nominal series is not comparable across years. deflate() divides by a price index rebased to base_year, turning current-price values into constant base_year prices.

Usage

deflate(data, value, base_year, deflator = NULL, suffix = "_real")

Arguments

data

A panel with iso3c, year and the value column.

value

The nominal value column (unquoted).

base_year

The year whose prices to express everything in.

deflator

Either a column in data holding the price index (unquoted), or NULL to fetch the World Bank GDP deflator (NY.GDP.DEFL.ZS) for the countries and years present. Fetching needs the network.

suffix

Suffix for the new column (default "_real").

Value

data with the constant-price column added.

Which deflator

The GDP deflator is the right default for aggregate output. For household spending the CPI (FP.CPI.TOTL) is usually preferred, and for cross-country level comparisons a deflator is not enough at all – you want to_ppp() as well, because exchange rates do not equalise purchasing power. Deflating and converting to PPP are different corrections for different problems, and a cross-country panel over time generally needs both.

See also

to_ppp(), per_capita(), index_to()

Examples

d <- data.frame(iso3c = "USA", year = 2000:2002,
                gdp = c(100, 110, 120), defl = c(90, 100, 105))
deflate(d, gdp, base_year = 2001, deflator = defl)
#> # A tibble: 3 × 5
#>   iso3c  year   gdp  defl gdp_real
#>   <chr> <int> <dbl> <dbl>    <dbl>
#> 1 USA    2000   100    90     111.
#> 2 USA    2001   110   100     110 
#> 3 USA    2002   120   105     114.