Inflation Protection from Homeownership: Long-Run Evidence: 1814-2008
45 Pages Posted: 9 Oct 2012
Date Written: October 8, 2012
This paper examines the inflation hedging capacity of the private home. We employ unique long-term data for inflation, house price dynamics and rents for Amsterdam dating back to 1814. We analyze inflation protection using various methodological approaches, periods, and investment horizons. Our Amsterdam data show that homeownership offers protection against expected inflation for relatively long investment horizons, especially in periods when inflation is persistent. The hedging capacities of housing regarding unexpected inflation are weak.
Keywords: Inflation hedging, House Prices, Investment Horizons
JEL Classification: E31, E44, G12
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