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Equilibrium with default-dependent credit constraints

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  • Emma Moreno Garcia
  • Juan Pablo Torres-Martinez

    () (Department of Economics, PUC-Rio)

Abstract

We state an infinite horizon sequential markets model with real assets in positive net supply and subject to credit risk. By introducing default-dependent borrowing constraints, we show the existence of equilibrium.

Suggested Citation

  • Emma Moreno Garcia & Juan Pablo Torres-Martinez, 2007. "Equilibrium with default-dependent credit constraints," Textos para discussão 540, Department of Economics PUC-Rio (Brazil).
  • Handle: RePEc:rio:texdis:540
    as

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    File URL: http://www.econ.puc-rio.br/pdf/td540.pdf
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    References listed on IDEAS

    as
    1. Magill, Michael & Quinzii, Martine, 1994. "Infinite Horizon Incomplete Markets," Econometrica, Econometric Society, vol. 62(4), pages 853-880, July.
    2. Páscoa, Mário Rui & Seghir, Abdelkrim, 2009. "Harsh default penalties lead to Ponzi schemes," Games and Economic Behavior, Elsevier, vol. 65(1), pages 270-286, January.
    3. Braido, Luis H.B., 2008. "Trading constraints penalizing default: A recursive approach," Journal of Mathematical Economics, Elsevier, vol. 44(2), pages 157-166, January.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Equilibrium; Infinite horizon incomplete markets; Infinite-lived real assets.;

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