Does Trading Remove or Bring Frictions?

Does Trading Remove or Bring Frictions?

Trading Frictions and House Price Dynamics

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 negativ...

Inflation and Welfare in Models with Trading Frictions∗

We study the effects of inflation in models with various trading frictions. The framework is related to recent search-based monetary theory, in that trade takes place periodically in centralized and decentralized markets, but we consider three alternative mechanisms for price formation: bargaining, price taking, and posting. Both the value of money per transaction and market composition are end...

The Role of Trading Frictions in Real Asset Markets

Almost all real assets trade in decentralized markets, where trading frictions could inhibit the efficiency of asset allocations and depress asset prices. In this paper, I use data on commercial aircraft markets to empirically investigate whether trading frictions vary with the size of the asset market. Intuitively, it is more difficult to sell assets that have a thin market. As a result, firms...

Does direct inhibition bring direct benefit?

n this issue of the Journal, Ozaki et al1 provide the first noteworthy evidence of the beneficial effect of the direct renin inhibitor (DRI), aliskiren, combined with reninangiotensin system (RAS) inhibitors in the myocardial recovery process of early acute myocardial infarction (AMI). It is well-known that RAS inhibitors protect against myocardial damage in patients with AMI, but the role of D...