Collateral constraints and rental markets

We study a benchmark model with collateral constraints and heterogeneous discounting. Contrarily to a rich literature on borrowing limits, we allow for rental markets. By incorporating this missing market, we show that impatient agents choose to rent rather than to own the collateral in the neighborhood of the deterministic steady state. Consequently, impatient agents are not indebted and borrowing constraints play no role in local dynamics.

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Year of publication:	2013
Authors:	d’Albis, Hippolyte ; Iliopulos, Eleni
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 121.2013, 3, p. 436-439
Publisher:	Elsevier
Subject:	Heterogeneous discounting \| Collateral constraints \| Rental market \| Credit market

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Type of publication:	Article
Classification:	E30 - Prices, Business Fluctuations, and Cycles. General ; R31 - Housing Supply and Markets
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010729467