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Owner Occupied Housing, Inflation and Monetary Policy

Robert Hill (), Miriam Steurer () and Sofie Waltl ()
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Miriam Steurer: University of Graz, Austria

No 2020-18, Graz Economics Papers from University of Graz, Department of Economics

Abstract: The ECB and Eurostat have been trying to bring owner-occupied housing (OOH) into the Harmonized Index of Consumer Prices (HICP) for two decades without success. OOH is now back on the agenda as part of the ECB's new monetary-policy strategy. A fresh perspective is needed. We argue that a viable way forward is using a simplified version of the user-cost method. This would improve the harmonization of the HICP, help close the credibility gap between measured in inflation and the public's perception of it, and make it easier for the ECB to achieve its inflation target.

Keywords: Measurement of inflation; Owner occupied housing; User cost; Rental equivalence; Hedonic quantile regression; Housing booms and busts; Inflation targeting; Disinflation puzzle; Leaning against the wind; Secular stagnation. (search for similar items in EconPapers)
JEL-codes: C31 C43 E01 E31 E52 R31 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-ure
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Working Paper: Owner-Occupied Housing, Inflation, and Monetary Policy (2019) Downloads
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