The calculation of dynamic correlation functions in quantum systems is formulated as a variational problem. For low-dimensional many-body systems this variational problem can be solved numerically using the density-matrix renormalisation group (DMRG). This dynamic DMRG method is demonstrated on the linear optical conductivity in the Mott insulating phase of the one-dimensional extended Hubbard model at half filling. The full optical spectrum of this model can be calculated almost exactly for chains with more than 100 sites, which is large enough to investigate the spectral properties in the thermodynamic limit. The accuracy of the method is illustrated by comparison with analytical results in the field-theoretical regime and in the strong-coupling limit.