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Rent indices for housing in West Germany 1985 to 1998

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Author Info
Hoffmann, Johannes
Kurz, Claudia

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

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Find related papers by JEL classification:
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Richard Arnott, 1997. "Rent Control," Boston College Working Papers in Economics 391., Boston College Department of Economics. [Downloadable!]
  2. Feenstra, R.C., 1995. "Exact Hedonic Price Indexes," Department of Economics 95-11, California Davis - Department of Economics.
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  3. 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. [Downloadable!] (restricted)
  4. Arnott, Richard, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
  6. 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. [Downloadable!]
  7. 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. [Downloadable!] (restricted)
  8. Nagy, John, 1997. "Do Vacancy Decontrol Provisions Undo Rent Control?," Journal of Urban Economics, Elsevier, vol. 42(1), pages 64-78, July. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. 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. [Downloadable!] (restricted)
  11. Curry, Bruce & Morgan, Peter & Silver, Mick, 2001. "Hedonic Regressions: Mis-specification and Neural Networks," Applied Economics, Taylor and Francis Journals, vol. 33(5), pages 659-71, April. [Downloadable!] (restricted)
  12. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-93, May. [Downloadable!] (restricted)
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  13. Hubert, Franz, 1995. "Contracting with costly tenants," Regional Science and Urban Economics, Elsevier, vol. 25(5), pages 631-654, October. [Downloadable!] (restricted)
  14. 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. [Downloadable!] (restricted)
  15. Anglin, Paul M & Gencay, Ramazan, 1996. "Semiparametric Estimation of a Hedonic Price Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 633-48, Nov.-Dec.. [Downloadable!] (restricted)
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  1. Nicole Jonker, 2002. "Constructing quality-adjusted price indices: a comparison of hedonic and discrete choice models," Working Paper Series 172, European Central Bank. [Downloadable!]
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