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"Market innovations following the financial reforms of the early 1980's relaxed collateral constraints on households …' borrowing. This paper examines the implications of this development for macroeconomic volatility. We combine collateral … goods purchases. The model predicts that this relaxation of collateral constraints can explain a large fraction of the …
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secured and unsecured markets following an adverse shock to credit risk. The scarcity of underlying collateral may amplify the … crisis ; Interbank market ; Liquidity ; Credit risk ; Collateral …
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