Title: The CPI for rents
Description: "Until the end of 1977, the method  used in the U.S.  consumer price index (CPI) to measure rent inflation tended to  omit rent increases when units had a change of tenants or were vacant.  Since  such units typically had more rapid increases in rents than average units, this  response bias biased inflation estimates downward.  Beginning in 1978, the  Bureau of Labor Statistics (BLS) implemented a series of methodological changes  that reduced response bias but substantial bias remained until 1985.  We set up  a model of response bias, parameterize it, and test it using a BLS microdata  set for rents.  We conclude that from 1940 to 1985 the CPI inflation rate for  rent most likely was understated by 1.4 percentage points annually in U.S.   data.  We construct an improved rental inflation series for 1940 to 2000; at the  starting point in 1940, the revised index is 54 percent as large as the  official CPI"--Federal Reserve Bank of Philadelphia web site.
Subjects: Consumer price indexes, Inflation (Finance), Rent charges
Places: United States