A Rental-Equivalence Index for Owner-Occupied Housing in West Germany 1985 to 1998

Deutsche Bundesbank Discussion Paper No. 08/2004

44 Pages Posted: 20 Dec 2004

See all articles by Claudia Kurz

Claudia Kurz

Deutsche Bundesbank - Economics Department

Johannes Hoffmann

Deutsche Bundesbank - Economics Department

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Abstract

In this paper, we review the German practice of imputing the costs of owner-occupied housing by increasing the relative weight of actual rents in the CPI. As the structure of owner-occupied housing differs substantially from that of rental housing, this variant of the imputation method may cause a bias in the German CPI. For assessing the appropriateness of the German imputation method, we estimate alternative rental equivalent indices based on the GSOEP. We find some evidence of an understatement of the true rate of price increase, which is, however, not directly related to the imputation method.

Keywords: Consumer Price Index, hedonics, housing, matched models

JEL Classification: C21, C43, D12, E31, R21, R31

Suggested Citation

Kurz, Claudia and Hoffmann, Johannes, A Rental-Equivalence Index for Owner-Occupied Housing in West Germany 1985 to 1998. Deutsche Bundesbank Discussion Paper No. 08/2004, Available at SSRN: https://ssrn.com/abstract=632202 or http://dx.doi.org/10.2139/ssrn.632202

Claudia Kurz

Deutsche Bundesbank - Economics Department ( email )

Wilhelm-Epstein-Strasse 14
60431 Frankfurt am Main
Germany

Johannes Hoffmann (Contact Author)

Deutsche Bundesbank - Economics Department ( email )

Wilhelm-Epstein-Strasse 14
60431 Frankfurt am Main
Germany
0049 69 9566 2320 (Phone)
0049 69 9566 4317 (Fax)

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