agencies’ business model, the procyclical behaviour of leverage in much of the financial system and of the Basel capital …

so provide liquidity to investors. A collateral constraint limits their positions as a function of capital. We show that …

collateral to borrow more, but in the process must liquidate some of their assets. Liquidated assets are purchased by non …, equilibrium price and level of collateral requirements are negatively related. However, compared to models where collateral … requirements are exogenously specified, the endogenously designed collateral in our model has a stabilizing role on prices: For any …

The paper studies how high leverage and crises can arise as a result of changes in the income distribution. Empirically … leverage for the remainder, and an eventual financial and real crisis. The paper presents a theoretical model where these … features arise endogenously as a result of a shift in bargaining powers over incomes. A financial crisis can reduce leverage if …

course of the 20th century, driven by a sharp rise of mortgage lending to households. Household debt to asset ratios have …

We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the … value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing … the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall …