Owner-Occupied Housing Costs and Bias in the Irish Consumer Price Index
AbstractThe treatment of owner-occupied housing costs is a recurring problem in the construction of consumer price indices, and there are competing methodologies. In the most widely-used Irish index, the Payments Approach, which attaches a weight to a term involving historical house prices and an interest rate, is used to measure these costs. It is argued that this has resulted in a substantial over-statement of inflation in recent quarters, and that the over-statement will continue for some time. The Irish version of Eurostat’s Harmonised Index of Consumer Prices, recently running well below the CPI, is a more reliable guide. Few national statistical offices use the Payments Approach, and it is argued that the procedure used in Ireland should be reviewed.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200707.
Length: 19 pages
Date of creation: 20 Jun 2007
Date of revision:
Consumer Price Index; Cost of Living Index; Payments Approach; Owner-Occupied Housing;
Find related papers by JEL classification:
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-21 (All new papers)
- NEP-CBA-2008-08-21 (Central Banking)
- NEP-MAC-2008-08-21 (Macroeconomics)
- NEP-URE-2008-08-21 (Urban & Real Estate Economics)
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