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

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

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 time-on-the-market, and between housing price and trading volume. Since housing markets are also characterised by a decentralised framework of exchange with important search and matching frictions, this paper examines whether the baseline search and matching model, i.e. the Mortensen-Pissarides model, can account for these three basic facts. We find that the behaviour of the housing market reflected in the above empirical findings can be addressed adequately by the standard matching framework.

• Item Type: MPRA Paper
• Language: English
• Keywords: matching models, time-on-the-market, housing price dispersion, trading volume, search and matching frictions
• 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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