Introducing housing costs in the HICP: challenges and policy implications for the European Central Bank.

I analyzed how the introduction of housing costs, through the net acquisition approach, would impact the HICP over the past decade. Starting from a theoretical analysis, I calculated a new inflation index, called HICP_A, that includes the Owner-Occupied Price Index published by Eurostat. After an initial phase of trend assessment, I found that the inclusion of a pro-cyclical variable, with a relatively low weight, doesn't affect the inflation rate in a significant way. Finally, with the help of a VAR model which includes GDP, HICP_A and interest rate, I explained how ECB policies would change (or not) in response to a new macroeconomic framework.