In this paper we use global analysis to study the welfare properties of general equilibrium economies with incomplete markets (GEI). Our main result is to show that constrained Pareto optimal equilibria are contained in a submanifold of the equilibrium set. This result is explicitly derived for...

This paper features an economy with incomplete markets, collateralised lending and investors that hold heterogeneous beliefs about the states of the world. Financial innovation motivated by macroprudential policies, takes the form of collateral hedging, which enables collateral protection...