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.
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References
Heilbroner, Robert, and Lester Thurow. 1982. Economics Explained. Englewood Cliffs, New Jersey: Prentice-Hall, Inc.
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.
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.
U.S. Office of the President. (1988). Economic Report of the President. Washington DC, U.S. Government Printing Office.
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Ruegg, R.T., Marshall, H.E. (1990). Treatment of Price Changes. In: Building Economics: Theory and Practice. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-4688-4_9
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DOI: https://doi.org/10.1007/978-1-4757-4688-4_9
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4757-4690-7
Online ISBN: 978-1-4757-4688-4
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