Blow, L.;
Nesheim, L.;
(2009)
A retail price index including the shadow price of owner occupied housing.
(cemmap Working Papers
CWP03/).
Institute for Fiscal Studies: London, UK.
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Abstract
How do house price changes affect the cost of living? The retail price index in the UK does not directly incorporate house price changes. In- stead it uses mortgage interest to capture the cost of owning a home. This is a useful method from many perspectives. However, from a con- sumer welfare perspective, while mortgage interest does capture the cost of a particular service, it does not capture the cost of housing services. The shadow price of housing captures the welfare cost to a household of changes in housing prices. In this paper we create a new shadow price index using RPI data and the shadow price of housing and investigate how replacing the mortgage interest with the shadow price of housing affects measures of the cost of living.
| Type: | Working / discussion paper |
|---|---|
| Title: | A retail price index including the shadow price of owner occupied housing |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://www.cemmap.ac.uk/publications.php |
| Language: | English |
| Keywords: | JEL classification: C43, E31, R21. Housing, retail price index, shadow price, user cost |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/14661 |
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