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

Gaetano Lisi

No 1312, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: In the housing markets three basic facts have been repeatedly reported by empirical studies: the existence of price dispersion, the positive correlation between housing price and timeon-the-market, and 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 standard matching framework allows to obtain a direct relationship between market frictions and house prices which represents 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)
Pages: 12 pages
Date: 2013-05
New Economics Papers: this item is included in nep-dge and nep-ure
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http://repecsrv.uv.es/paper/RePEc/pdf/eec_1312.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: Can the Mortensen-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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Persistent link: https://EconPapers.repec.org/RePEc:eec:wpaper:1312

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