TY  - JOUR
AU  - Caplin,Andrew
AU  - Leahy,John
TI  - Trading Frictions and House Price Dynamics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14605
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14605
L1  - http://www.nber.org/papers/w14605.pdf
N1  - Author contact info:
Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu

John V. Leahy
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/992-9770
E-Mail: john.leahy@nyu.edu
AB  - 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.
ER  -