Can the Mortensen-Pissarides model match the housing market facts?

Lisi, Gaetano (2012): Can the Mortensen-Pissarides model match the housing market facts?

Abstract

This paper examines whether the baseline Mortensen-Pissarides matching model can account for the housing market facts, namely, the existence of price dispersion, the positive correlation between housing price and trading volume, and between housing price and time-on-the-market. Our main finding is that the model can account for these three basic facts of the housing market, thus showing that the Mortensen-Pissarides framework can be seen as the benchmark macroeconomic model not only for the labour market but for any market with frictions.

• Item Type: MPRA Paper
• Language: English
• Keywords: housing price dispersion, time-on-the-market, trading volume, search and matching process
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R21 - Housing Demand

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