Endogenous Credit Limits with Small Default Costs

Azariadis, Costas; Kaas, Leo

Endogenous Credit Limits with Small Default Costs

Dateien

azariadis_214415.pdfGröße: 349.89 KBDownloads: 233

Datum

2012

Autor:innen

Azariadis, Costas

Kaas, Leo

Open Access-Veröffentlichung

Open Access Green

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Working Paper/Technical Report

Publikationsstatus

Published

Zusammenfassung

We analyze an exchange economy of unsecured credit where borrowers have the option to declare bankruptcy in which case they are temporarily excluded from financial markets. Endogenous credit limits are imposed that are just tight enough to prevent default. Economies with temporary exclusion differ from their permanent exclusion counterparts in two important properties. If households are extremely patient, then the first–best allocation is an equilibrium in the latter economies but not necessarily in the former. In addition, temporary exclusion permits multiple stationary equilibria, with both complete and with incomplete consumption smoothing.

Fachgebiet (DDC)

330 Wirtschaft

Schlagwörter

Bankruptcy, Endogenous solvency constraints

Zitieren

ISO 690

AZARIADIS, Costas, Leo KAAS, 2012. Endogenous Credit Limits with Small Default Costs

BibTex

@techreport{Azariadis2012Endog-21441,
  year={2012},
  series={Working Paper Series / Department of Economics},
  title={Endogenous Credit Limits with Small Default Costs},
  number={2012-17},
  author={Azariadis, Costas and Kaas, Leo},
  note={http://ideas.repec.org/p/fip/fedlwp/2012-048.html}
}

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Kommentar zur Publikation

http://ideas.repec.org/p/fip/fedlwp/2012-048.html

Universitätsbibliographie

Ja