Housing Rents and Inflation Rates

Ambrose, Brent W.; Coulson, N. Edward; Yoshida, Jiro

doi:10.2139/ssrn.2787193

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Housing Rents and Inflation Rates

Journal of Money, Credit and Banking

28 Pages Posted: 31 May 2016 Last revised: 1 Feb 2022

See all articles by Brent W. Ambrose

N. Edward Coulson

University of California, Irvine - Paul Merage School of Business

Jiro Yoshida

Pennsylvania State University - Smeal College of Business; The University of Tokyo - Graduate School of Economics

Date Written: January 31, 2022

Abstract

This paper develops a quality-adjusted measure of marginal housing rents using a monthly statistic of landlord net rental income. The Marginal Rent Index (MRI) exhibits deflation during recessions and leads the official rent index by seven months. The modified inflation rate based on MRI suggests that the annual official inflation rate was overestimated by 1.7 to 4.1% during the Great Recession but underestimated by 0.3 to 0.7% during the subsequent expansionary period.

Keywords: Inflation Measurement, Consumer Price Index (CPI), Personal Consumption Expenditures (PCE), Marginal Rent Index, Repeat Rent Index

JEL Classification: E01, E31, R31, H55

Suggested Citation: Suggested Citation

Ambrose, Brent W. and Coulson, N. Edward and Yoshida, Jiro, Housing Rents and Inflation Rates (January 31, 2022). Journal of Money, Credit and Banking, Available at SSRN: https://ssrn.com/abstract=2787193 or http://dx.doi.org/10.2139/ssrn.2787193