Market Rents and CPI Shelter Inflation

Laurence Ball and Kyung Woong Koh

No 34113, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent research finds that the shelter component of CPI inflation responds with a lag to movements in market rents—the rents that tenants pay when they move into a new dwelling. This paper seeks to improve our understanding of this fact. We start by identifying three sources of lags between market rents and CPI shelter: the rents of most tenants are set in long-term leases; rents are smoothed for continuing tenants who renew leases; and CPI shelter inflation is measured with rent changes over six months. We incorporate these lags in a model of shelter inflation and compare the model to monthly data since 2015, using the Zillow Observed Rent Index to measure market rents. We find that the model performs fairly well, suggesting that it may be useful for understanding and forecasting inflation.

JEL-codes: E31 R21 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-mon
Note: ME
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34113.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34113

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34113
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().