In this paper, we prove the existence of a recursive competitive equilibrium (RCE) for an Aiyagari style economy with permanent income shocks and perpetual youth structure. We show that there exist equilibria where borrowing constraints are never binding. This allows us to establish a...

This paper studies whether anomalies in consumption can be explained by a behavioral model in which agents make predictable errors in forecasting income. We use a micro-data set containing subjective expectations about future income. The paper shows that, the null hypothesis of rational...

This paper proposes a model of an incomplete markets economy with pro- duction, in which the firm acts as financial innovator by issuing claims against its stock. The firm’s objective is to maximize its adjusted value, which is the sum of the market value and the shareholders’ surplus from...

We consider a two period pure exchange economy with a finite number of states of nature at the second date. The economy consists of a real asset structure and a finite set of durable goods in the initial period that depreciate; we suppose that there is only one single good available in each state...

The aim of this paper is to explore the effects of interest rate ceilings in a small open economy. In order to account for many individuals and lending, a model with heterogenous agents is considered. The investigation is focused on two issues: first, how effective are interest rate ceilings at...

We investigate the welfare effects of proportional income taxation in a standard general equilibrium model with incomplete markets (GEI). Formally, our analysis is on the allocative effects of state-contingent income tax reforms. Tax reforms are restricted to be anonymous, publicly and...

Pension systems often entail some compulsory saving over which individuals have some degree of choice in terms of the pension plan in which to invest. Our contribution analyses whether the choice between alternative plans is affected by the presence of liquidity constraints during working life....

We build a general equilibrium model where agents are subject to endogenous trading constraints, making the access to financial trade dependent on prices and consumption decisions. Besides, our framework is compatible with the existence of endogenous financial segmentation and credit markets'...

The relationship between government and household consumption remains to be one of the contentious issues in both theories and empirics, though its’ immense importance in fiscal policy formulation. Like theories, the empirical studies regarding the relationship between government and household...

The aim of this work is to match household consumption information from Indagine sui Consumi delle Famiglie (Household Budget Survey, HBS) by the Italian National Statistical Institute (ISTAT) with Indagine sui Bilanci delle Famiglie Italiane (Survey of Households’ Income and Wealth, SHIW) by...