Measuring the Services of Durables and Owner Occupied Housing: A Unified Framework and Forty Years of Tokyo Evidence

W. Erwin Diewert and Chihiro Shimizu

No DP26-8, RCESR Discussion Paper Series from Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University

Abstract: Measuring owner-occupied housing services in the CPI is one of the most contested problems in official statistics. We nest five approaches acquisitions, rental equivalence, user cost, financial user cost, and opportunity cost within the identity uₜ = rₜ + c - πₜ. Using 3.1 million Tokyo property records over 1986-2025, we show that conventional measures diverge sharply and can reverse sign across asset-price cycles. The opportunity cost approach eliminates negative user costs in all 480 sample months. The dominant CPI bias source is the price channel procyclical acquisitions and sticky rents not the weight channel. Our findings directly address the Eurostat HICP impasse.

Keywords: Owner-occupied housing; CPI; cost-of-living index; financial user cost; rental equivalence; rent stickiness; hedonic regression; Tokyo; Eurostat HICP (search for similar items in EconPapers)
JEL-codes: C43 D12 E31 R21 R31 (search for similar items in EconPapers)
Pages: 208 pages
Date: 2026-03
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Persistent link: https://EconPapers.repec.org/RePEc:hit:rcesrs:dp26-8

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