Quantifying and Explaining Stickiness in Housing Rents: A Turkish Case Study with Micro-Level Data

Quantifying and Explaining Stickiness in Housing Rents: A Turkish Case Study with Micro-Level Data

Title:

Quantifying and Explaining Stickiness in Housing Rents: A Turkish Case Study with Micro-Level Data

Number:

14/09

Author(s):

Cem Aysoy, Cevriye Aysoy, Semih Tümen

Language:

English

Date:

April 2014

Abstract:

Using a national panel of housing units, this paper documents that the rate of nominal rigidities in housing rents is high in Turkey between 2008 and 2011. We find that, on average, 31.5 percent of the rents did not change from year to year in nominal terms. We then ask if the incidence of nominal rigidity depends on the turnover status of the housing unit. We show that 35.4 percent of the nonturnover units had rigid rents, while for only 17.1 percent of the turnover units rents did not change. We also present evidence that grid pricing is responsible for more than half of the observed nominal rigidities in housing rents. The household- and individual-level determinants of the nominal rigidities in rents, turnover status, and tenure in the same unit are also investigated using the micro-level details available in our dataset. Implications of these results for monetary policy, inflation accounting, welfare, asset prices, and other redistributional issues are discussed.

Keywords:

Housing rents, Nominal rigidities, Turnover, Grid pricing

JEL Codes:

E31; R21; R31

Quantifying and Explaining Stickiness in Housing Rents: A Turkish Case Study with Micro-Level Data
CENTRAL BANK OF THE REPUBLIC OF TURKEY Head Office Anafartalar Mah. İstiklal Cad. No:10 06050 Ulus Altındağ Ankara Phone : (+90 312) 507 50 00 | Fax : (+90 312) 507 56 40