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This paper considers the problem of optimal unemployment insurance in a moral hazard framework. Unlike existing literature, unemployed workers can secretly participate in a hidden labor market; as a consequence, an endogenous lower bound for promised utility preventing "immiserization" arises....
Persistent link: https://www.econbiz.de/10005790054
When consumers can’t pay their credit card bills, they choose between delinquency and bankruptcy. A new economic model indicates that by changing the face value of delinquent debt, lenders can maximize repayment and make a difference in whether or not a household chooses bankruptcy.
Persistent link: https://www.econbiz.de/10011261864
A delinquency rate of 15 percent for all student loan borrowers implies a delinquency rate of 27.3 percent for borrowers with loans in repayment.
Persistent link: https://www.econbiz.de/10011261867
is characterized by countercyclical default risk. In this paper we develop a quantitative dynamic stochastic small open economy model with incomplete markets,endogenous fiscal policy and sovereign and private sector default where public expenditures and tax rates are optimally procyclical. The...
Persistent link: https://www.econbiz.de/10011080410
Consumer debt and bankruptcy are central issues today because of their explosive trends over the last 20 years in the U.S. economy. However, there is no convincing explanation for these facts. A drop in information costs, a potential cause, has not been evaluated mainly because there is no...
Persistent link: https://www.econbiz.de/10011080883
How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for...
Persistent link: https://www.econbiz.de/10011081479
What determines the technology that a country adopts? While many factors affect technological adoption, the efficiency of the country's financial system may also play a significant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with...
Persistent link: https://www.econbiz.de/10011123623
The world's output for 2014 is expected to end up being below trend, and the forecast for this year doesn't look much better. Once again, the U.S. is performing better than most other developed countries.
Persistent link: https://www.econbiz.de/10011182964
We first study growth and risk sharing in a stochastic growth model with preference shocks and two risk-averse agents. In periods in which one of the agents needs extra consumption (insurance), it is socially optimal to reduce the consumption of the other agent (redistribution) and also to...
Persistent link: https://www.econbiz.de/10010724754
For years, perhaps even decades, Japan’s economy has struggled with low growth and low inflation. A year ago, new policies were put into place to turn around the economy. Although there are similarities between Japan’s experience and that of other developed countries (including the U.S.),...
Persistent link: https://www.econbiz.de/10010739538