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Owner Occupied Housing, Inflation and Monetary Policy

Author

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  • Robert J. Hill

    (University of Graz, Austria)

  • Miriam Steurer

    (University of Graz, Austria)

  • Sofie R. Waltl

    (Luxembourg Institute of Socio-Economic Research, Luxembourg)

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.

Suggested Citation

  • Robert J. Hill & Miriam Steurer & Sofie R. Waltl, 2020. "Owner Occupied Housing, Inflation and Monetary Policy," Graz Economics Papers 2020-18, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2020-18
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    Cited by:

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    2. Denisa Naidin & Sofie R. Waltl & Michael Ziegelmeyer, 2022. "Objectified Housing Sales and Rent Prices in Representative Household Surveys: the Impact on Macroeconomic Statistics," LISER Working Paper Series 2022-03, Luxembourg Institute of Socio-Economic Research (LISER).
    3. Lopez, Luis A. & Yoshida, Jiro, 2022. "Estimating housing rent depreciation for inflation adjustments," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    4. Robert J. Hill & Norbert Pfeifer & Miriam Steurer & Radoslaw Trojanek, 2021. "Warning: Some Transaction Prices can be Detrimental to your House Price Index," Graz Economics Papers 2021-11, University of Graz, Department of Economics.
    5. Alfons J. Weichenrieder & Eren Gürer, 2020. "Inflation, Inflationsmessung und Zentralbankpolitik," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(11), pages 834-838, November.
    6. Hans Manner & Gabriel Rodriguez & Florian Stöckler, 2021. "A changepoint analysis of exchange rate and commodity price risks for Latin American stock markets," Graz Economics Papers 2021-14, University of Graz, Department of Economics.

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    More about this item

    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.;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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