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Treatment of Price Changes

  • Rosalie T. Ruegg
  • Harold E. Marshall

Abstract

We give attention to the question of how to deal with changes in price level because it is a much misunderstood and confusing issue. First, we demonstrate the need to adjust for changes in the purchasing power of the dollar.1 Next, we show how to measure changes in the price of a good or service in current dollars and in constant dollars. Finally, we describe two valid approaches for dealing with inflation in an economic evaluation: (1) working in current dollars and removing inflation as part of the discounting operation and (2) working in constant dollars and excluding inflation at the outset.

Keywords

Discount Rate Cash Flow Price Change Gross National Product Producer Price Index 
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References

  1. Heilbroner, Robert, and Lester Thurow. 1982. Economics Explained. Englewood Cliffs, New Jersey: Prentice-Hall, Inc.Google Scholar
  2. Ruegg, Rosalie T. 1989. Life-Cycle Costing for Energy Conservation in Buildings: Instructor’s Guide. NISTIR 89–4129. Gaithersburg, MD: National Institute of Standards and Technology.Google Scholar
  3. Ruegg, Rosalie T. and Sieglinde K. Fuller. 1990. Economic Analysis for MILCON Design: Concepts, Techniques, and Applications for the Analyst. NISTIR 90–4255. Gaithersburg, MD: National Institute of Standards and Technology.Google Scholar
  4. U.S. Office of the President. (1988). Economic Report of the President. Washington DC, U.S. Government Printing Office.Google Scholar

Copyright information

© Springer Science+Business Media New York 1990

Authors and Affiliations

  • Rosalie T. Ruegg
  • Harold E. Marshall

There are no affiliations available

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