, collateral values, and debt limits. We show that the collateral premium of a durable asset will become the lowest right before a …

collateral to support arbitrage trades. We show that with volatile asset demands, arbitrage becomes risky. With information … frictions, a looser collateral policy might render the economy more vulnerable to extremely large demand shocks, while a tighter … collateral constraint helps maintain the stability at the cost of market liquidity supply …

, collateral values, and debt limits. We show that the collateral premium of a durable asset will become the lowest right before a …