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Equilibrium with limited-recourse collateralized loans

  • Rubén Poblete-Cazenave

    ()

  • Juan Torres-Martínez

    ()

We address a general equilibrium model with limited-recourse collateralized loans and securitization of debts. Each borrower is required to pledge physical collateral, and bankruptcy is filed against him if claims are not fully honored. Moreover, agents have a positive amount of wealth exempt from garnishment and, for at least a fraction of them, commodities used as collateral are desirable. In this context, equilibrium exists for any continuous garnishment rule and multiple types of reimbursement mechanisms. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00199-011-0685-8
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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 53 (2013)
Issue (Month): 1 (May)
Pages: 181-211

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Handle: RePEc:spr:joecth:v:53:y:2013:i:1:p:181-211
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Order Information: Web: http://www.springer.com/economics/economic+theory/journal/199/PS2

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