We are grateful to the editor, Jan Eeckhout, and three anonymous referees for their very helpful comments and suggestions. We also thank Melvyn Coles, Juanjo Dolado, Andrés Erosa, Miquel Faig, Javier Fernández Blanco, Ed Green, Tim Kehoe, María J. Luengo-Prado, Facundo Piguillem, Fabian Postel-Vinay, José-Víctor Ríos-Rull, Guillaume Rocheteau, Peter Rupert, Manuel Santos, Carles Vergara, and participants of the SED Conference at MIT 2008, III REDg DGE Macroeconomics Workshop at Madrid 2008, XIII Workshop on Dynamic Macroeconomics at Vigo 2008, SED Conference at Istanbul 2009, IESE Workshop on Search and Matching 2010 at Barcelona, and seminars at Banco de España, University of Bristol, Universidad Carlos III, University of Essex, Universidad de Salamanca, Universidad Católica de Chile, and Universidad de Chile. Díaz thanks the Spanish DGCYT (project ECO2010-20614) for financial support. Jerez thanks Fundación Ramón Areces and Spanish DGCYT (projects SEJ2007-66820, ECO2010-20614, and Ramón y Cajal Program). Both authors thank the Bank of Spain's Programme of Excellence in Research. Errors are ours. Please address correspondence to: Antonia Díaz, Department of Economics, Universidad Carlos III de Madrid, Calle Madrid, 126, Getafe 28903, Madrid, Spain. E-mail: firstname.lastname@example.org.
HOUSE PRICES, SALES, AND TIME ON THE MARKET: A SEARCH-THEORETIC FRAMEWORK
Article first published online: 17 JUL 2013
© (2013) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
International Economic Review
Volume 54, Issue 3, pages 837–872, August 2013
How to Cite
DÍAZ, A. and JEREZ, B. (2013), HOUSE PRICES, SALES, AND TIME ON THE MARKET: A SEARCH-THEORETIC FRAMEWORK. International Economic Review, 54: 837–872. doi: 10.1111/iere.12019
- Issue published online: 17 JUL 2013
- Article first published online: 17 JUL 2013
- Manuscript Revised: AUG 2012
- Manuscript Received: OCT 2010
- Spanish DGCYT. Grant Numbers: SEJ2007-66820, ECO2010-20614
- Ramón y Cajal Program
We assess the ability of a standard search and matching framework to account for the cyclical properties of key macroeconomic time series of the housing market. We calibrate a model with aggregate demand and supply shocks to match selected business cycle properties of vacancies and sales in the United States. Our model reproduces the cyclical time series properties of house prices and the positive and negative comovement of prices with sales and time on the market, respectively. Search and matching frictions produce trading delays that augment the volatility of prices and propagate the effect of aggregate shocks to future periods.