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Default and Efficient Debt Markets

Author

Listed:
  • Dutta, J.
  • Kapur, S.

Abstract

We examine default-free contracts in an infinite-horizon economy in which some individuals have access to a productive, intertemporal technology. Individuals without access to the technology must lend their savings to those with access.

Suggested Citation

  • Dutta, J. & Kapur, S., 2000. "Default and Efficient Debt Markets," Discussion Papers 00-14, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:00-14
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    References listed on IDEAS

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    1. Allen, Franklin, 1985. "Repeated principal-agent relationships with lending and borrowing," Economics Letters, Elsevier, vol. 17(1-2), pages 27-31.
    2. Andrew Atkeson & Robert E. Lucas, 1992. "On Efficient Distribution With Private Information," Review of Economic Studies, Oxford University Press, vol. 59(3), pages 427-453.
    3. Bulow, Jeremy & Rogoff, Kenneth, 1989. "Sovereign Debt: Is to Forgive to Forget?," American Economic Review, American Economic Association, vol. 79(1), pages 43-50, March.
    4. Kimball, Miles S, 1988. "Farmers' Cooperatives as Behavior Toward Risk," American Economic Review, American Economic Association, vol. 78(1), pages 224-232, March.
    5. Thomas, Jonathan & Worrall, Tim, 1990. "Income fluctuation and asymmetric information: An example of a repeated principal-agent problem," Journal of Economic Theory, Elsevier, vol. 51(2), pages 367-390, August.
    6. Jayasri Dutta & Sandeep Kapur, 1998. "Liquidity Preference and Financial Intermediation," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 551-572.
    7. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    8. Timothy J. Kehoe & David K. Levine, 1993. "Debt-Constrained Asset Markets," Review of Economic Studies, Oxford University Press, vol. 60(4), pages 865-888.
    9. Narayana R. Kocherlakota, 1996. "Implications of Efficient Risk Sharing without Commitment," Review of Economic Studies, Oxford University Press, vol. 63(4), pages 595-609.
    10. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
    11. Allen, Franklin, 1981. "The Prevention of Default," Journal of Finance, American Finance Association, vol. 36(2), pages 271-276, May.
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    Cited by:

    1. Liu, Wei & Spanjers, Willem, 2005. "Social capital and credit constraints in informal finance," Economics Discussion Papers 2005-5, School of Economics, Kingston University London.
    2. V. Filipe Martins-da-Rocha & Yiannis Vailakis, 2017. "On the sovereign debt paradox," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(4), pages 825-846, December.
    3. Filipe Martins da Rocha & Yiannis Vailakis, 2017. "Borrowing in Excess of Natural Ability to Repay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 42-59, January.
    4. Gaetano Bloise, 2013. "The structure of competitive equilibrium with unsecured debt," Departmental Working Papers of Economics - University 'Roma Tre' 0187, Department of Economics - University Roma Tre.
    5. Braido, Luis H.B., 2008. "Trading constraints penalizing default: A recursive approach," Journal of Mathematical Economics, Elsevier, vol. 44(2), pages 157-166, January.

    More about this item

    Keywords

    DEBT ; EFFICIENCY ; PRICING;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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