Price Discovery in Illiquid Markets: Do Financial Asset Prices Rise Faster Than They Fall?

Why do prices rise faster than they fall

Why do prices rise faster than they fall? With an application to mortgage rates

✍ Linda A. Toolsema; Jan P. A. M. Jacobs 📂 Article 📅 2007 🏛 John Wiley and Sons 🌐 English ⚖ 170 KB

## Abstract Empirical literature shows that prices respond asymmetrically to cost changes in many markets, rising faster than falling. An example is the mortgage rate, which follows an increase in capital market rates faster than a decrease. We examine various theoretical explanations for asymmetri