<p>There are two approaches.</p>
<p>A.Multiply real gdp by a constant so the result equals nominal gdp in 2000 (instead of 2005). That constant is<br/> (nominal gdp in 2000 / real gdp in 2000)</p>
<p>B. Create a new deflator that equals 1 in 2000, and use it to convert nominal to real. That new deflator is <br/> (deflator / deflator in 2000)
<br/> Note: you can multiply this by 100 if you want it to equal 100 in the base year.</p>

CC BY-SA 4.0
2021-05-03T13:28:17.053Z
2021-05-03T13:28:17.053Z
Daniel
<p>Deflator in 2000 should be 100 as it your base year. </p>

CC BY-SA 3.0
2016-04-30T05:56:42.283Z
2016-04-30T05:56:42.283Z
Sub-Optimal
<p>It's just real GDP in year t, times (deflator in year 2000 / deflator in year t).</p>

CC BY-SA 4.0
2015-04-08T19:48:50.520Z
2021-05-12T15:47:14.193Z
2021-05-12T15:47:14.193Z
dismalscience
<p>I'll use the US as an example. I have three data series</p>

<ol>
<li>nominal GDP $(Y)$</li>
<li>real GDP in 2005 USD $(\bar{Y})$</li>
<li>the GDP deflator $(d)$, with 2005 as the base year, so $d_{2005} = 100$</li>
</ol>

<p>I want to change the base year to 2000. Are these calculations accurate? I use the notation $\$_{t}$ for USD in year $t$ prices to help myself keep the units straight.</p>

<p>My goal is $\bar{Y}_{t} \ \$_{2000}$.
\begin{align}
\frac{d_{2000}}{d_{t}} \cdot Y_{t} \ \$_t
&amp;= \frac{Y_{2000} \ \$_{2000}}{\bar{Y}_{2000} \ \$_{2005}} \cdot \frac{\bar{Y}_{t} \ \$_{2005}}{Y_{t} \ \$_{t}} \cdot Y_{t} \ \$_t \\
&amp;= \frac{Y_{2000} \ \$_{2000}}{\bar{Y}_{2000}} \cdot \bar{Y}_{t} \\
&amp;= \bar{Y}_{t} \ \$_{2000} \cdot \frac{Y_{2000}}{\bar{Y}_{2000}}
\end{align}</p>

<p>I think those are all the correct unit cancellations, but now I'm stuck with the unitless quantity $\frac{Y_{2000}}{\bar{Y}_{2000}}$, so I don't know how to complete the conversion. </p>

<p>Am I doing this right?</p>

<macroeconomics><gdp><base-year>
How do I change the base year of real GDP using the GDP deflator and nominal GDP?
M T
# How do I change the base year of real GDP using the GDP deflator and nominal GDP?

(Asked by: username_0 on 2015-04-08)

I'll use the US as an example. I have three data series

1. nominal GDP $(Y)$
2. real GDP in 2005 USD $(\bar{Y})$
3. the GDP deflator $(d)$, with 2005 as the base year, so $d\_{2005} = 100$

I want to change the base year to 2000. Are these calculations accurate? I use the notation $\$\_{t}$ for USD in year $t$ prices to help myself keep the units straight.

My goal is $\bar{Y}\_{t} \ \$\_{2000}$.
\begin{align}
\frac{d\_{2000}}{d\_{t}} \cdot Y\_{t} \ \$\_t
&= \frac{Y\_{2000} \ \$\_{2000}}{\bar{Y}\_{2000} \ \$\_{2005}} \cdot \frac{\bar{Y}\_{t} \ \$\_{2005}}{Y\_{t} \ \$\_{t}} \cdot Y\_{t} \ \$\_t \\
&= \frac{Y\_{2000} \ \$\_{2000}}{\bar{Y}\_{2000}} \cdot \bar{Y}\_{t} \\
&= \bar{Y}\_{t} \ \$\_{2000} \cdot \frac{Y\_{2000}}{\bar{Y}\_{2000}}
\end{align}

I think those are all the correct unit cancellations, but now I'm stuck with the unitless quantity $\frac{Y\_{2000}}{\bar{Y}\_{2000}}$, so I don't know how to complete the conversion.

Am I doing this right?

**Tags:** macroeconomics, gdp, base-year

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## 3 answers

### Answer by username_3 on 2015-04-08. Score: 4 | Accepted answer

It's just real GDP in year t, times (deflator in year 2000 / deflator in year t).


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### Answer by username_1 on 2021-05-03. Score: 0

There are two approaches.

A.Multiply real gdp by a constant so the result equals nominal gdp in 2000 (instead of 2005). That constant is  
 (nominal gdp in 2000 / real gdp in 2000)

B. Create a new deflator that equals 1 in 2000, and use it to convert nominal to real. That new deflator is   
 (deflator / deflator in 2000)
  
 Note: you can multiply this by 100 if you want it to equal 100 in the base year.


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### Answer by username_2 on 2016-04-30. Score: -2

Deflator in 2000 should be 100 as it your base year.


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