We decompose aggregate consumption by modelling both savers and their links to collateral constrained borrowers through … proportion to the riskiness of assets, the demand for loans, the asset price and the quantity of housing collateral. We show that …

collateral constraint motivated by limited enforcement. Borrowing is secured by collateral in the form of durable goods whose … movements, which exacerbate fluctuations in the wedges induced by the collateral constraint. In this context optimality requires … deviations from price stability and calls for exchange rate stabilization. -- Global imbalances ; collateral constraints …