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 …

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 …

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 …

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. …

models with limited commitment, default penalties and collateral. Along this line, we introduce in the setting of Araujo et … existence of equilibria in a model with limited commitment and (possible) default. We appropriately modify the definition of … show that, independent of the level of default penalties, restricting plans to have finite equivalent payoffs rules out …

In this paper we examine the effects of default and collateral on risk sharing. We assume that there is a large set of … assets which all promise a risk less payoff but which distinguish themselves by their collateral requirements. In equilibrium … agents default, the assets have different payoffs, and there are as many linearly independent assets available for trade as …

backed by collateral, the value of which depends on monetary policy. The decision to default is endogenous and depends on the … relative value of the collateral to the loan. We show that Collateral Monetary Equilibria exist and prove there is also a … of monetary policy highlights the default channel affecting trades and production, and provides a rigorous foundation to …

. Players may share heterogenous beliefs. Short positions in derivatives are constrained by collateral requirements. A central …