This paper studies the optimal trade-off between commitment and flexibility in an intertemporal consumption/savings choice model. Individuals expect to receive relevant information regarding their own situation and tastes - generating a value for flexibility - but also expect to suffer from...

We study the optimal trade-off between commitment and flexibility in a consump- tion-savings model. Individuals expect to receive relevant information regarding tastes and thus they value the flexibility provided by larger choice sets. On the other hand, they also expect to suffer from...

In this paper, we present a tractable model of a small open economy where the main driver of international borrowing is investment. Debt is non-state-contingent and the choice of default is endogenous, as in Eaton and Gersovitz (1981). By introducing a simple AK technology, we obtain a setup...