In this paper, we propose a model of endogenous partial insurance and we investigate its implications for macroeconomic outcomes, such as wealth inequality, asset accumulation, interest rate, and consumption smoothing. To this end, we include participation costs to state-contingent asset markets...

This paper provides a theory of endogenous implicit guarantees and how this leads to the existence of systemic assets, i.e. assets that are too important to default. In the presence of imperfectly observable private liquidity needs, direct transfers to agents are imperfect so that, when more...