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Collateral Avoids Ponzi Schemes in Incomplete Markets

Author

Listed:
  • Aloisio Araujo

    () (Instituto Nacional de Matemática Pura e Aplicada—IMPA and EPGE/FGV, Rio de Janeiro, Brazil)

  • Mário Rui Páscoa

    () (Universidade Nova de Lisboa, Lisbon, Portugal)

  • Juan Pablo Torres-Martínez

    () (Pontifícia Universidade Católica do Rio de Janeiro, Brazil)

Abstract

Without introducing either debt constraints or transversality conditions to avoid the possibility of Ponzi schemes, we show the existence of equilibrium in an infinite horizon incomplete markets economy with a collateral structure. Copyright The Econometric Society 2002.

Suggested Citation

  • Aloisio Araujo & Mário Rui Páscoa & Juan Pablo Torres-Martínez, 2002. "Collateral Avoids Ponzi Schemes in Incomplete Markets," Econometrica, Econometric Society, vol. 70(4), pages 1613-1638, July.
  • Handle: RePEc:ecm:emetrp:v:70:y:2002:i:4:p:1613-1638
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