Coen-Pirani, Daniele; Carceles-Poveda, Eva - Carnegie Mellon University, Tepper School of Business
Macroeconomic models with heterogeneous agents and incomplete markets (e.g. Krusell and Smith, 1998) usually assume that consumers, rather than firms, own and accumulate physical capital. This assumption, while convenient, is without loss of generality only if the asset market is complete. When...