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New Estimates for the Price of Housing in the Japanese CPI

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  • Diewert, W. Erwin
  • Imai, Satoshi
  • Shimizu, Chihiro

Abstract

The paper looks at problems associated with measuring the services of owner-occupied housing (OOH) in the Japanese CPI. The paper shows that alternative approaches to measuring the services of OOH lead to quite different measures of CPI inflation for Japan. The Japanese CPI uses a rental equivalence approach to measuring OOH services and uses an index of all paid rents to price these services. However, Japanese rents are very sticky and under these circumstances, it seems more appropriate to use an index of newly contracted rents to value the opportunity cost of using the services of owned dwelling units. The paper examines this issue. It also looks at the adequacy of the sampling approach used in the Japanese CPI and at the problems surrounding the treatment of depreciation in constructing constant quality indexes for paid rents in the Japanese CPI. Finally, hedonic regressions for the quality adjustment of rents are run on an extensive data set.

Suggested Citation

  • Diewert, W. Erwin & Imai, Satoshi & Shimizu, Chihiro, 2015. "New Estimates for the Price of Housing in the Japanese CPI," Economics working papers erwin_diewert-2015-14, Vancouver School of Economics, revised 17 Jul 2015.
    • Handle: RePEc:ubc:bricol:erwin_diewert-2015-14
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    References listed on IDEAS

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    More about this item

    Keywords

    housing rent; price rigidity; time-dependent model; state-dependent model; adjustment hazard function; user cost of housing; rental equivalence approa;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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