This paper proposes and tests a theory of credit-driven asset bubbles which are neutral in their real effects. When a … output comes from an unusual regime. -- Bubbles ; fiscal theory of the price level ; collateral constraints ; neutrality … lender such as a government, central bank, or banking sector is willing to lend infinitely against collateral, explosive …

This paper builds a theory of informal contract enforcement in social networks. In our model, relationships between … individuals generate social collateral that can be used to control moral hazard when agents interact in a borrowing relationship …

We introduce credit frictions motivated by moral hazard in a general equilibrium model of international trade with two … for vertical product differentiation in a sector determines how credit tightening affects investment and price setting …). Consequently, credit tightening leads to firm exit, increased innovation activity among existing suppliers, and welfare losses that …