A life-cycle model with equilibrium default in which consumers with and without temptation coexist is constructed to … default premia and better consumption smoothing. However, those who borrow and default due to temptation or unavoidable large …

I construct the life-cycle model with equilibrium default and preferences featuring temptation and self-control. The … effect is positive in the no-temptation model. As for the optimal default punishment, welfare of the agents without … lower default premium. On the other hand, welfare of agents with temptation is maximized when weak punishment leads to a …

assets to be pledged as collateral. It is shown that the resulting optimal portfolio is not always tilted towards holding …

subsequently materialize. Introducing default and limited collateral into general equilibrium theory (GE) allows for a theory of …The possibility of default limits available liquidity. If the potential default draws nearer, a liquidity crisis may … ensue, causing a crash in asset prices, even if the probability of default barely changes, and even if no defaults …

evidence. The long established idea for inhibiting the default behavior is to resort to collateral, and this idea has profound …In the real economic world, we often suffer from the default risk—the present financial crisis could serve as an … effect on the market equilibrium. To study this effect, we make an investigation of the economy wherein default risk is …

focus on the consequence of default on loans when the value of the collateral falls below the value of the debt it secures … collateral for loans, to study the effect of an unanticipated income shock when the economy is in a steady state equilibrium. We … from default on the collateralized loans. We show that this asymmetry can be seen in the data on housing prices and …

Pascoa and Seghir (2009) noticed that when collateralized promises become subject to utility penalties on default … the collateral does not yield utility (for example, when it is a productive asset or a security). Equilibrium exists also … under more severe penalties and collateral utility gains, when the promise or the collateral are nominal assets and the …

goods, collateralized securities and the possibility of default to argue that the reliance on collateral to secure loans and …Much of the lending in modern economies is secured by some form of collateral: residential and commercial mortgages and … the particular collateral requirements chosen by the social planner or by the market have a profound impact on prices …

goods, collateralized securities, and the possibility of default to argue that the reliance on collateral to secure loans …Much of the lending in modern economies is secured by some form of collateral: residential and commercial mortgages and … and the particular collateral requirements chosen by the social planner or by the market have a profound impact on prices …

novating trades implements efficient trading behaviour. It is optimal for the CCP to face default losses to achieve the … efficient level of trade. To cover these losses, the CCP optimally uses margin calls, and, as the default problem becomes more … severe, also requires default funds and then imposes position limits. …