Trading Frictions and House Price Dynamics
نویسندگان
چکیده
We construct a model of trade with matching frictions. The model provides a simple characterization for the joint proces of prices, sales and inventory. We compare the implications of the model to certain properties of housing markets. The model can generate the large price changes and the positive correlation between prices and sales that we see in the data. Unlike the data, prices are negatively autocorrelated and high inventory predicts price appreciation. We investigate several amendments to the model. Andrew Caplin Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 and NBER [email protected] John Leahy Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 and NBER [email protected]
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