Eichberger, Jürgen; Rheinberger, Klaus; Summer, Martin - CESifo - 2014
This paper contributes to the literature on default in general equilibrium. Borrowing and lending takes place via a … clearing house (bank) which monitors agents and enforces contracts. Our model develops a concept of bankruptcy equilibrium that … is a direct generalization of the standard general equilibrium model with financial markets. Borrowers may default in …