Ambrus, Attila; Egorov, Georgy - Duke University, Department of Economics - 2012
driving force of this. Using the consumption-savings model proposed by Amador, Werning and Angeletos in their 2006 … Econometrica paper (henceforth AWA), in which individuals face the trade-off between flexibility and commitment, we show that … likelihood that withdrawal penalties are part of the optimal contract is decreasing in the probability of a negative liquidity …