equilibrium and political economy considerations. I argue that economic theory plays (should play) a central role in formulating … microdata that ignores general equilibrium and political economy issues may lead to misleading conclusions. I illustrate the …

agents from defaulting. We present a simple example for which efficient allocations and all equilibrium elements are …

We characterize equilibria with endogenous debt constraints for a general equilibrium economy with limited commitment … equilibrium debt limits must satisfy a simple condition that allows agents to exactly roll over existing debt period by period …. Second, we provide an equivalence result, whereby the resulting set of equilibrium allocations with self-enforcing private …

extend the characterization of efficient allocations. Second, we present an equilibrium concept with complete markets and … sharing. We show a version of the classical welfare theorems for this equilibrium definition. We characterize the pricing …

contingencies to asset markets. In some models, these contingencies can be used by consumers to achieve the same equilibrium … allocations as in models with complete markets. In particular, the equilibrium allocation in the debt constrained model of Kehoe … and Levine (2001) can be implemented in a model with bankruptcy and collateral. The equilibrium allocation is constrained …

unemployment) in which equilibrium selection is not conditioned on a sunspot variable. Instead, large temporary shocks initiate … the highunemployment regime was the unique equilibrium outcome. …