Robust Bubbles with Mild Penalties for Default

Limited enforcement of debt contracts and mild penalties for default can lead to low equilibrium interest rates, to ensure debt repayment. Low interest rates, in turn, create conditions for bubbles. I show that bubbles in unsecured private debt exist when the punishment for default is a permanent or a temporary interdiction to trade. Bubbles are an inefficient source of liquidity, as they lower interest rates and reduce welfare by discouraging saving

MoreLess

Year of publication:	2020
Authors:	Bidian, Florin
Publisher:	[2020]: [S.l.] : SSRN

freely available

Full text |

More access options

doi.org

Check Google Scholar

In German libraries (KVK)

I need help

Extent:	1 Online-Ressource (39 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	In: Journal of Mathematical Economics, Volume 65, August 2016, Pages 141-153 Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments May 4, 2015 erstellt
Other identifiers:	10.2139/ssrn.2375154 [DOI]
Classification:	G12 - Asset Pricing ; G11 - Portfolio Choice ; E44 - Financial Markets and the Macroeconomy ; D53 - Financial Markets ; D51 - Exchange and Production Economies
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012856827