We consider an intertemporal economy with liquidity constrained and unconstrained individuals. A liquidity constraint prevents marketability of future income and thus endogenously generates market incompleteness. In contrast with the existing literature on portfolio constraints, our liquidity...

While the efficiency of economic arrangements is the primary focus of economic research, we may ask whether the efficiency improvements that have been experienced in the developed economies have been accompanied by increased vulnerability of output to catastrophic events. In order to address...