Excel for Economics Students: Growth Rates, Index Numbers, and CAGR

Growth rates

Period-on-period growth rate

=(new_value - old_value) / old_value
=(B3 - B2) / B2
-- GDP growth from one year to the next
-- Format as percentage

Year-on-year growth across a series

=(B3/B2) - 1
-- Equivalent to the above, slightly cleaner
-- Drag down to calculate growth for every year in a series

CAGR — Compound Annual Growth Rate

=(end_value / start_value)^(1/years) - 1
=(B10/B2)^(1/8) - 1
-- CAGR over 8 years (B2=start, B10=end)
-- Answers: "what steady annual rate would produce this total growth?"

Price index numbers

Simple price index (base year = 100)

=(current_price / base_price) * 100
=(B3 / $B$2) * 100
-- $B$2 locks the base year price
-- Drag down to calculate index for every period

Real vs nominal values (deflating)

=nominal_value / (price_index / 100)
=B3 / (C3/100)
-- Convert nominal GDP to real GDP using price index in column C

Elasticity calculations

Price elasticity of demand

=((Q2-Q1)/Q1) / ((P2-P1)/P1)
=((C3-C2)/C2) / ((B3-B2)/B2)
-- % change in quantity / % change in price
-- Negative = normal good, Positive = Giffen good

Weighted averages (for price indices)

=SUMPRODUCT(prices_range, weights_range) / SUM(weights_range)
-- Weighted average price
-- Used in CPI and other composite price indices

💡 Downloading economic data into Excel

World Bank, IMF, and OECD all offer data downloads as CSV or Excel files. Download directly, paste into Excel, and use the formulas above. For UK data, ONS offers Excel downloads on almost every statistical release.

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Excel for economics studentsgrowth rates, index numbers, and CAGR