cornerstone of credit markets in most societies since antiquity. The ability to seize and sell collateral reduces the creditor …

the cost of ex-post inefficiency when there are adverse aggregate shocks to the fundamental quality of collateral … shocks by engaging in collateral liquidations. Financial arbitrage by less leveraged financial intermediaries equilibrates … returns from acquiring collateral at fire-sale prices and returns from real-sector lending, inducing higher lending rates, a …

economy tends to damage risk sharing when the composition of collateral is biased toward private assets. As we show that a … stable economy is more propitious to the creation of private collateral, stability makes risk sharing increasingly fragile to … valuation of collateral. Both private and public assets are used in insurance markets as collateral, but their exposure to …

collateral is scarce, regional consumption growth is about twice as sensitive to income growth. Household-level borrowing … frictions can explain this new stylized fact. When the value of housing relative to human wealth falls, loan collateral shrinks …, borrowing (risk-sharing) declines, and the sensitivity of consumption to income increases. Our model aggregates heterogeneous …