Collateral constraints and rental markets
AbstractWe study a benchmark model with collateral constraints and heterogeneous discounting. Contrarily to a rich literature on borrowing limits, we allow for rental markets. By incorporating this missing market, we show that impatient agents choose to rent rather than to own the collateral in the neighborhood of the deterministic steady state. Consequently, impatient agents are not indebted and borrowing constraints play no role in local dynamics.
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Date of creation: 01 Dec 2013
Date of revision:
Publication status: Published, Economics Letters, 2013, 121, 436-439
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heterogeneous discounting; collateral constraints; rental market; credit market.;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-06-02 (All new papers)
- NEP-DGE-2014-06-02 (Dynamic General Equilibrium)
- NEP-URE-2014-06-02 (Urban & Real Estate Economics)
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