Penn State Alternative Inflation Rate

Consumer prices may be more volatile than are represented in current government inflation indexes. These indexes are used to guide a range of economic decisions including guidance on interest rates and Social Security cost-of-living adjustments. The research of Dr. Brent Ambrose and Dr. Jiro Yoshida shows how housing rent information collected by the US Bureau of Economic Analysis may lead to errors in the official inflation rates. Since housing makes up a large part of the inflation indexes, small errors in their measurement can have sizable impacts on official inflation pronouncements. For example, their analysis indicates that the official inflation rate was overestimated by up to 4% during the Great Recession and is currently underestimated by almost 1%. Find additional information about the new Penn State Alternative Inflation Index here.

Dr. Brent Ambrose is the Smeal Professor of Real Estate, Director of the Institute for Real Estate Studies, and Director of the Smeal College Ph.D. Program. He specializes in real estate finance, corporate finance, and fixed income security analysis. Dr. Ambrose has consulted with the U.S. Department of Housing and Urban Development and the Congressional Budget on many important issues.

Dr. Jiro Yoshida is Associate Professor at the Smeal College of Business and Fellow at the Institute for Real Estate Studies. He also serves as Research Associate at Columbia Business School, Senior Research Fellow at the Ministry of Finance of Japan, and Research Fellow at the Housing Research and Advancement Foundation of Japan. Dr. Yoshida’s area of research includes asset pricing, real estate finance, and macroeconomics. He is a recipient of the dissertation award from American Real Estate and Urban Economics Association and Fulbright Scholarship.