Can the Mortensen-Pissarides Model Match the Housing Market Facts?

Gaetano Lisi

Journal of Economics and Econometrics, 2013, vol. 56, issue 2, 78-92

Abstract: In the housing markets three basic facts have been repeatedly reported by empirical studies: the existence of price dispersion, the trade-off between housing price and time-on-the-market, and the positive correlation between housing price and trading volume. Since housing markets are characterised by a decentralised framework of exchange with important search and matching frictions, this paper examines whether the baseline search and matching model can account for these three basic facts. We find that the direct relationship between market tightness and house price, derived by the standard matching model, is the key mechanism to explain the basic facts of the housing market.

Keywords: Matching models; Housing markets; Time-on-the-market; Housing price dispersion; Trading volume. (search for similar items in EconPapers)
JEL-codes: J63 R21 R31 (search for similar items in EconPapers)
Date: 2013
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Related works:
Working Paper: Can the Montersen-Pissarides Model Match the Housing Market Facts? (2013)
Working Paper: Can the Mortensen-Pissarides model match the housing market facts? (2012)
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