Pecuniary Externalities in Competitive Economies with Limited Pledgeability - LEDa (Laboratoire d'Economie de Dauphine) Accéder directement au contenu
Pré-Publication, Document De Travail (Preprint/Prepublication) Année : 2022

Pecuniary Externalities in Competitive Economies with Limited Pledgeability

Résumé

We analyze the efficiency properties of competitive economies with strategic default and limited pledgeability. We show that laissez-faire equilibria can be constrained suboptimal. Under certain conditions, imposing tighter borrowing constraints (relative to the laissez-faire regime) can make everybody in the economy better off. The inefficiency is due to the interaction between debt pricing and the default option, which generates a pecuniary externality. We also show that a Pigouvian subsidy on net financial positions may induce borrowers to internalize this externality and increase welfare.
Fichier principal
Vignette du fichier
limited-pledgeability-main-2022-09-10.pdf (907.36 Ko) Télécharger le fichier
limited-pledgeability-online-appendix-2022-09-10 (1).pdf (830.22 Ko) Télécharger le fichier
limited-pledgeability-online-appendix-2022-09-10.pdf (830.22 Ko) Télécharger le fichier
Origine : Fichiers produits par l'(les) auteur(s)

Dates et versions

hal-03909596 , version 1 (21-12-2022)

Identifiants

  • HAL Id : hal-03909596 , version 1

Citer

V. Filipe Martins-Da-Rocha, Toan Phan, Yiannis Vailakis. Pecuniary Externalities in Competitive Economies with Limited Pledgeability. 2022. ⟨hal-03909596⟩
44 Consultations
25 Téléchargements

Partager

Gmail Facebook X LinkedIn More