Chapter

Durables and Owner-Occupied Housing in a Consumer Price Index

Edited by W. Erwin Diewert

in Price Index Concepts and Measurement

Published by University of Chicago Press

Published in print February 2010 | ISBN: 9780226148557
Published online February 2013 | e-ISBN: 9780226148571 | DOI: http://dx.doi.org/10.7208/chicago/9780226148571.003.0013
Durables and Owner-Occupied Housing in a Consumer Price Index

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This chapter provides a detailed review of alternative treatments of homeownership in a Consumer Price Index, discussing the advantages and disadvantages of several approaches to measuring homeowner costs. These include the acquisition price of housing units, per-period homeowner spending for mortgage interest and other periodic payments, user cost, and rental equivalence. The user cost and rental equivalence techniques are alternative flow-of-services approaches. The chapter records that a major difficulty associated with forming any housing price index is that units are unique and also depreciate over time, making it difficult to construct price indexes using a matched-model methodology. It discusses various methods for overcoming this difficulty.

Keywords: homeownership; Consumer Price Index; costs; price index; user cost; rental equivalence

Chapter.  28570 words. 

Subjects: Econometrics and Mathematical Economics

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