The Nominal Rigidity of Apartment Rents

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Abstract
This paper contributes to the empirical literature on price stickiness by documenting a high rate of nominal rigidity among housing rents in the United States between 1974 and 1981. Of the units studied, 29% had no change in nominal rents from year to year. The incidence was much higher (a) in years and cities with a low median nominal rent growth rate, and among (b) units whose tenants continued from the previous year and (c) units in small buildings. A little less than half of the nominal rigidity can be ascribed to grid pricing. Possible explanations, as well as the likely distributive and allocative implications, are discussed. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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