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Credit limits and heterogeneity in general equilibrium models with a finite number of agents

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  • Pham, Ngoc-Sang

Abstract

We introduce two-period general equilibrium models with heterogeneous producers and financial frictions. Any agent can borrow to realize their productive project but the debt repayment does not exceed a fraction (so-called credit limit) of the project's value. Our framework allows us to investigate the aggregate and distributional effects of credit limits and heterogeneity of agents. The connection between credit limits, welfare, and efficiency is also explored.

Suggested Citation

  • Pham, Ngoc-Sang, 2018. "Credit limits and heterogeneity in general equilibrium models with a finite number of agents," MPRA Paper 88736, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88736
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    References listed on IDEAS

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    More about this item

    Keywords

    General equilibrium; credit limits; heterogeneity; distributional effects; welfare; efficiency; wealth distribution.;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D6 - Microeconomics - - Welfare Economics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G1 - Financial Economics - - General Financial Markets

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