Disentangling Rent Index Differences: Data, Methods, and Scope

Brian Adams, Lara Loewenstein, Hugh Montag and Randal Verbrugge

American Economic Review: Insights, 2024, vol. 6, issue 2, 230-45

Abstract: Rent measurement determines 32 percent of the CPI. Accurate rent measurement is therefore essential for accurate inflation measurement, but the CPI rent index often differs from alternative rent inflation measures. Using repeat-rent inflation measures created from CPI microdata, we show that this discrepancy is largely explained by differences in rent growth for new tenants relative to all tenants. New-tenant rent inflation provides information about future all-tenant rent inflation, but the use of new-tenant rents is contraindicated in a cost-of-living index such as the CPI. Nevertheless, policy-makers should integrate new-tenant inflation into inflation forecasts and monetary policy decisions.

JEL-codes: E31 E37 E52 R31 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Disentangling rent index differences: data, methods, and scope (2023)
Working Paper: Disentangling Rent Index Differences: Data, Methods, and Scope (2022)
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DOI: 10.1257/aeri.20220685

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