Hangovers

Research output: Contribution to journalArticle

Abstract

This paper analyzes a process by which a market boom brought on by a temporary increase in the flow of buyers, can subsequently lead to a collapse of liquidity (speed of sale), prices and production to levels lower than before the onset of the boom. I consider a general model of markets subject to search frictions in the matching of buyers and sellers, where the entry of buyers and sellers (through production) are subject to adjustment costs. The resulting co-movement between unemployment, inventories and sales with the production cycle matches the stylized facts.

Original languageEnglish
Pages (from-to)203-218
Number of pages16
JournalInternational Economic Journal
Volume26
Issue number2
DOIs
Publication statusPublished - 2012 Jun 1

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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