Working Paper Revision
Disentangling rent index differences: data, methods, and scope
Abstract: Rent measurement determines 32 percent of the CPI. Accurate rent measurement is therefore essential for accurate inflation measurement, but the CPI rent index often differs from alternative measures of rent inflation. Using repeat-rent inflation measures created from CPI microdata, we show that this discrepancy is largely explained by differences in rent growth for new tenants relative to all tenants. New-tenant rent inflation provides information about future all-tenant rent inflation, but the use of new-tenant rents is contraindicated in a cost-of-living index such as the CPI. Nevertheless, policymakers should integrate new-tenant inflation into inflation forecasts and monetary policy decisions.
JEL Classification: E27; E31; E37; H31;
https://doi.org/10.26509/frbc-wp-202238r
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Provider: Federal Reserve Bank of Cleveland
Part of Series: Working Papers
Publication Date: 2023-09-28
Number: 22-38R
Related Works
- Working Paper Revision (2023-09-28) : You are here.
- Working Paper Original (2022-12-19) : Disentangling rent index differences: data, methods, and scope