New Estimates for the Price of Housing in the Japanese CPI

Walter Diewert, Satoshi Imai and Chihiro Shimizu

Economics working papers from Vancouver School of Economics

Abstract: The paper looks at problems associated with measuring the services of owner-occupied housing (OOH) in the Japanese CPI. The paper shows that alternative approaches to measuring the services of OOH lead to quite different measures of CPI inflation for Japan. The Japanese CPI uses a rental equivalence approach to measuring OOH services and uses an index of all paid rents to price these services. However, Japanese rents are very sticky and under these circumstances, it seems more appropriate to use an index of newly contracted rents to value the opportunity cost of using the services of owned dwelling units. The paper examines this issue. It also looks at the adequacy of the sampling approach used in the Japanese CPI and at the problems surrounding the treatment of depreciation in constructing constant quality indexes for paid rents in the Japanese CPI. Finally, hedonic regressions for the quality adjustment of rents are run on an extensive data set.

Keywords: housing rent; price rigidity; time-dependent model; state-dependent model; adjustment hazard function; user cost of housing; rental equivalence approa (search for similar items in EconPapers)
JEL-codes: E30 R20 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2015-07-17, Revised 2015-07-17
New Economics Papers: this item is included in nep-mac and nep-ure
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http://econ.sites.olt.ubc.ca/files/2015/07/pdf_pap ... tesfor-the-price.pdf (application/pdf)

Related works:
Chapter: New Estimates for the Price of Housing in the Japanese CPI (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ubc:bricol:erwin_diewert-2015-14

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