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Measuring the Services of Durables and Owner Occupied Housing : A Unified Framework and Forty Years of Tokyo Evidence

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  • DIEWERT, W. Erwin
  • SHIMIZU, Chihiro

Abstract

Measuring owner-occupied housing services in the CPI is one of the most contested problems in official statistics. We nest five approaches acquisitions, rental equivalence, user cost, financial user cost, and opportunity cost within the identity uₜ = rₜ + c - πₜ. Using 3.1 million Tokyo property records over 1986-2025, we show that conventional measures diverge sharply and can reverse sign across asset-price cycles. The opportunity cost approach eliminates negative user costs in all 480 sample months. The dominant CPI bias source is the price channel procyclical acquisitions and sticky rents not the weight channel. Our findings directly address the Eurostat HICP impasse.

Suggested Citation

  • DIEWERT, W. Erwin & SHIMIZU, Chihiro, 2026. "Measuring the Services of Durables and Owner Occupied Housing : A Unified Framework and Forty Years of Tokyo Evidence," RCESR Discussion Paper Series DP26-8, Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:rcesrs:dp26-8
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    1. Shimizu, Chihiro & Nishimura, Kiyohiko G. & Watanabe, Tsutomu, 2016. "House prices at different stages of the buying/selling process," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 37-53.
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    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • 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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