This paper proposes a model of how agents adjust their asset holdings in response to losses in general equilibrium. By …, and the resulting losses elicit reactions by all agents. This activates several channels of debt-deflation. Yet we show … keeps the asset market stable is the presence of agents without prior debt or losses, who borrow to exploit the expected …

premiums and losses using vector autoregressive (VAR) models. Second, it showed how premiums respond to shocks to losses …, surplus, interest rates, the variance in losses, and the variance in interest rates. New empirical results based on a … decomposition of variance methodology suggest that changes in losses, surplus, interest rates, and uncertainty do explain …