02141cas a2200289 a 4500 AALejournalIMF022100 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498303804 1018-5941 BD-DhAAL BD-DhAAL Ebrahimy, Ehsan. Fire Sales in Frozen Markets / Ehsan Ebrahimy. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students It is challenging to explain the collapse in the price of subprime mortgage-backed securities (MBS) during the Financial Crisis of 2008, using the existing models of fire-sale. I present a model to demonstrate that fire-sales may happen even when there is a relatively sizable pool of natural buyers and in the absence of asymmetric information, due to a coordination failure among buyers: buyers' waiting to trade at a lower price tomorrow, can lead to a collapse in the price and trade volume today. In particular, I show that when trade is decentralized and participation is endogenous, a medium level of asset demand and liquidity needs that are ex-pected to increase over time create complementarity among buyers' decisions to wait. This complementarity makes competitive markets prone to coordination failures and fire-sales accompanied by a collapse in the trade volume. Fire-sales may also be inefficient. I also discuss various policy options to eliminate the risk of fire-sales in such a setup. Mode of access: Internet Asset Market imf Asset Price imf Equilibrium Price imf WP imf IMF Working Papers; Working Paper ; No. 2019/092 Full text available on IMF http://elibrary.imf.org/view/journals/001/2019/092/001.2019.issue-092-en.xml IMF e-Library