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Rent indices for housing in West Germany 1985 to 1998

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  • Hoffmann, Johannes
  • Kurz, Claudia

Abstract

In several studies, hedonic methods have been used successfully for the ex post assessment of the accuracy of inflation measurement. Most of those studies relate to high-tech products, with respect to which traditional methods of compiling price indices often fail. We apply hedonic methods to rental housing services, which display less quality progress. However, as German households devote about 10 % of their total expenditure to rented housing services, even a small bias in this field might induce a substantial distortion in overall inflation measurement. On the basis of data from the German Socio-Economic Panel, we perform a hedonic analysis of housing rents and compile different price indices. Overall, we conclude that there is some evidence of an understatement of rent inflation in the official rent index for West Germany at the beginning of the 1990s. -- Hedonische Methoden wurden in einer Reihe von Studien erfolgreich für die ex post Analyse der Genauigkeit der Inflationsmessung verwendet. Die meisten dieser Studien beziehen sich auf High-tech Produkte, bei denen traditionelle Methoden zur Berechnung von Preisindizes oftmals versagen. Wir wenden hedonische Methoden auf Mieten für Wohnungen an. Dort ist der Qualitätsfortschritt weniger stark. Da aber die privaten Haushalte in Deutschland rund 10 % ihres Budgets für Mieten ausgeben, könnte selbst eine kleine Verzerrung in diesem Bereich die Genauigkeit der Inflationsmessung insgesamt empfindlich stören. Auf Grundlage von Daten des Sozioökonomischen Panels schätzen wir hedonische Gleichungen für Wohnungsmieten und berechnen verschiedene Indizes. Insgesamt kommen wir zu dem Ergebnis, dass es in Westdeutschland Anfang der neunziger Jahre Hinweise auf eine Unterschätzung des Mietenanstiegs durch den offiziellen Mietenindex gab.

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2002,01.

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Date of creation: 2002
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Handle: RePEc:zbw:bubdp1:4166

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Keywords: Consumer Price Index; hedonics; housing; matched models;

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References

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  1. Quigley, John M., 1982. "Nonlinear budget constraints and consumer demand: An application to public programs for residential housing," Journal of Urban Economics, Elsevier, vol. 12(2), pages 177-201, September.
  2. Arguea, N.M. & Hsiao, C., 1992. "Econometric Issues of Estimating Hedonic Price Functions- with an Application to the U.S. Market for Automobiles," Papers 9203, Southern California - Department of Economics.
  3. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 634-53, November.
  4. Nagy, John, 1997. "Do Vacancy Decontrol Provisions Undo Rent Control?," Journal of Urban Economics, Elsevier, vol. 42(1), pages 64-78, July.
  5. Bruce Curry & Peter Morgan & Mick Silver, 2001. "Hedonic regressions: mis-specification and neural networks," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 659-671.
  6. Russell Davidson & James G. MacKinnon, 1980. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Working Papers 378, Queen's University, Department of Economics.
  7. Brent R. Moulton & Karin E. Moses, 1997. "Addressing the Quality Change Issue in the Consumer Price Index," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 305-366.
  8. Can, Ayse & Megbolugbe, Isaac, 1997. "Spatial Dependence and House Price Index Construction," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 203-22, Jan.-Marc.
  9. Frick, Joachim R. & Grabka, Markus M., 2001. "Der Einfluß von Imputed Rent auf die personelle Einkommensverteilung," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 285-308.
  10. Richard Arnott, 1997. "Rent Control," Boston College Working Papers in Economics 391., Boston College Department of Economics.
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  13. Kurz, Claudia & Hoffmann, Johannes, 2004. "A rental-equivalence index for owner-occupied housing in West Germany 1985 to 1998," Discussion Paper Series 1: Economic Studies 2004,08, Deutsche Bundesbank, Research Centre.
  14. Guasch, J. Luis & Marshall, Robert C., 1987. "A theoretical and empirical analysis of the length of residency discount in the rental housing market," Journal of Urban Economics, Elsevier, vol. 22(3), pages 291-311, November.
  15. Linneman, Peter, 1987. "The effect of rent control on the distribution of income among New York City renters," Journal of Urban Economics, Elsevier, vol. 22(1), pages 14-34, July.
  16. Linneman, Peter, 1980. "Some empirical results on the nature of the hedonic price function for the urban housing market," Journal of Urban Economics, Elsevier, vol. 8(1), pages 47-68, July.
  17. Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
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  19. Pace, R Kelley & Gilley, Otis W, 1997. "Using the Spatial Configuration of the Data to Improve Estimation," The Journal of Real Estate Finance and Economics, Springer, vol. 14(3), pages 333-40, May.
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Citations

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Cited by:
  1. Hugo J. Reis & J.M.C.Santos Silva, 2002. "Hedonic Prices Indexes for New Passenger Cars in Portugal (1997-2001)," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  2. Tomat, Gian Maria, 2002. "Durable goods, price indexes and quality change: an application to automobile prices in Italy, 1988-1998," Working Paper Series 0118, European Central Bank.
  3. Concetta Rondinelli & Giovanni F. Veronese, 2010. "Housing rent dynamics in Italy," Questioni di Economia e Finanza (Occasional Papers) 62, Bank of Italy, Economic Research and International Relations Area.

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