Housing Rents and Inflation Rates
Journal of Money, Credit and Banking
28 Pages Posted: 31 May 2016 Last revised: 1 Feb 2022
Date Written: January 31, 2022
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