Nominal GDP may be converted to real GDP using the GDP deflator.
Gross Domestic Product, or GDP, may be expressed in both nominal and real terms. A GDP adjusted in real terms takes into account inflation, which is the long-run change in prices. Converting nominal GDP to real GDP is relatively easy if you have the data needed in the calculation. In addition to the nominal GDP, you will also need data pertaining to the GDP deflator. Both types of data are published by the Bureau of Economic Analysis.
Instructions
1. Obtain GDP statistics. If your research pertains to the United States, the Bureau of Economic Analysis publishes quarterly GDP data. The bureau breaks down all components of GDP into areas such as the consumption of durable and non-durable goods, imports and exports, nonresidential and residential investment and state and federal spending.
2. Obtain data for the GDP deflator from the Bureau of Economic Analysis. The GDP deflator is published every three months. It is essentially a ratio of nominal GDP and real GDP. It takes into account all measures of GDP except imported goods.
3. Divide the nominal GDP by the GDP deflator to obtain real GDP.
