Disentangling rent index differences: data, methods, and scope

Brian Adams, Lara Loewenstein, Hugh Montag () and Randal Verbrugge

No 22-38R, Working Papers from Federal Reserve Bank of Cleveland

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 measures of rent inflation. 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, policymakers should integrate new-tenant inflation into inflation forecasts and monetary policy decisions.

Keywords: house prices; rent growth; inflation measurement; monetary policy; forecasting; marginal rent growth; average rent growth (search for similar items in EconPapers)
JEL-codes: E27 E31 E37 H31 (search for similar items in EconPapers)
Pages: 33
Date: 2022-12-19, Revised 2023-09-28
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Disentangling Rent Index Differences: Data, Methods, and Scope (2024)
Working Paper: Disentangling Rent Index Differences: Data, Methods, and Scope (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:95306

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DOI: 10.26509/frbc-wp-202238r

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