This paper studies economic environments with transactions technology. It shows that a simple redefinition of the commodity space allows these environments to be studied as instances of Debreu's valuation equilibrium. Thus, results from standard general equilibrium theory, namely, proof of...

The authors present a theory of unsecured consumer debt that does not rely on utility costs of default or on enforcement mechanisms that arise in repeated-interaction settings. The theory is based on private information about a person's type and on a person's incentive to signal his type to...

What caused the worldwide collapse in output from 1929 to 1933? Why was the recovery from the trough of 1933 so protracted for the U.S.? How costly was the decline in terms of welfare? Was the decline preventable? These are some of the questions that have motivated economists to study the Great...

The authors study, theoretically and quantitatively, the general equilibrium of an economy in which households smooth consumption by means of both a riskless asset and unsecured loans with the option to default. The default option resembles a bankruptcy filing under Chapter 7 of the U.S....

We analyze a general-equilibrium asset pricing model where a small subset of the consumers/investors have a short-run ldquo;urge to saverdquo;. That is, their attitude toward consumption in the long run is a standard one they do place zero weight on consumption far enough out in the future but...

This paper uses a dynamic political economy model to evaluate whether the observed rise in wage inequality and decrease in median to mean wages can explain some portion of the relative increase in transfers to low earnings quintiles and relative increase in effective tax rates for high earnings...

This paper develops a political economy model to evaluate how inequality affects policies via the political process. The model is an extension of Krusell and Rios-Rull (1999) to incorporate uninsured idiosyncratic risk to income. Using this framework, we evaluate the response of social insurance...

We develop a model of banking industry dynamics to study the quantitative impact of capital requirements on bank risk taking, commercial bank failure, and market structure. We propose a market structure where big, dominant banks interact with small, competitive fringe banks. Banks accumulate...