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

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  • Lisi, Gaetano

Abstract

This paper examines whether the Mortensen-Pissarides matching model can account for the housing market facts, most of all the empirical anomaly known as ‘price dispersion’. Our main finding is that the model can account for the three basic facts of housing market (namely, the existence of price dispersion, the positive correlation between housing price and trading volume, and between housing price and time-on-the market), without any restrictive assumption and in a very simple framework.

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File URL: http://mpra.ub.uni-muenchen.de/36769/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36769.

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Date of creation: 04 Jan 2012
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Handle: RePEc:pra:mprapa:36769

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Keywords: housing price dispersion; time-on-the-market; bargaining power; search and matching frictions;

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References

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  1. Jos Janssen & Bert Kruijt & Barrie Needham, 1994. "The Honeycomb Cycle in Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 9(2), pages 237-252.
  2. Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
  3. Merlo, Antonio & Ortalo-Magne, Francois, 2004. "Bargaining over residential real estate: evidence from England," Journal of Urban Economics, Elsevier, vol. 56(2), pages 192-216, September.
  4. Andrew Caplin & John Leahy, 2011. "Trading Frictions and House Price Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 283-303, October.
  5. Jeffrey Fisher & Dean Gatzlaff & David Geltner & Donald Haurin, 2003. "Controlling for the Impact of Variable Liquidity in Commercial Real Estate Price Indices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(2), pages 269-303, 06.
  6. Charles Ka Yui Leung & Youngman Chun Fai Leong & Siu Kei Wong, 2005. "Housing Price Dispersion: an empirical investigation," Discussion Papers 00012, Chinese University of Hong Kong, Department of Economics.
  7. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, January.
  8. Wasmer, Etienne & Weil, Philippe, 2000. "The Macroeconomics of Labor and Credit Market Imperfections," IZA Discussion Papers 179, Institute for the Study of Labor (IZA).
  9. Gaetano Lisi, 2011. "The Hedonic Price Function in a Matching Model of Housing Market," Economics Bulletin, AccessEcon, vol. 31(3), pages 2347-2355.
  10. Charles Ka Yui Leung & Jun Zhang, 2011. "¡§Fire Sales¡¨ in Housing Market: Is the House- Search Process Similar to a Theme Park Visit?," International Real Estate Review, Asian Real Estate Society, vol. 14(3), pages 311-329.
  11. Robert Novy-Marx, 2009. "Hot and Cold Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(1), pages 1-22.
  12. Albrecht, James & Gautier, Pieter A. & Vroman, Susan, 2010. "Directed Search in the Housing Market," CEPR Discussion Papers 7639, C.E.P.R. Discussion Papers.
  13. James Albrecht & Axel Anderson & Eric Smith & Susan Vroman, 2007. "Opportunistic Matching In The Housing Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 641-664, 05.
  14. Anglin, Paul M & Rutherford, Ronald & Springer, Thomas M, 2003. "The Trade-Off Between the Selling Price of Residential Properties and Time-on-the-Market: The Impact of Price Setting," The Journal of Real Estate Finance and Economics, Springer, vol. 26(1), pages 95-111, January.
  15. Krainer, John, 2001. "A Theory of Liquidity in Residential Real Estate Markets," Journal of Urban Economics, Elsevier, vol. 49(1), pages 32-53, January.
  16. Genesove, David & Han, Lu, 2012. "Search and matching in the housing market," Journal of Urban Economics, Elsevier, vol. 72(1), pages 31-45.
  17. Vukina, Tomislav & Zheng, Xiaoyong, 2010. "Bargaining, Search, and Price Dispersion: Evidence from the Live Hogs Market," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(3), October.
  18. Brian Petereson, 2009. "Fooled by Search: Housing Prices, Turnover and Bubbles," Caepr Working Papers 2009-004, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Can the Mortensen-Pissarides Model Match the Housing Market Facts?
    by Christian Zimmermann in NEP-DGE blog on 2013-05-23 00:59:53

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