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Séminaire Economie & Econométrie
Jeudi 29 Septembre 2011
Xavier RAGOT (PSE) présentera une communication :
"Default and Credit Constraints in General Equilibrium"
avec François Le Grand
de 14 h à 15 h 30 en Salle S016 à l'INSEE-CREST, 15 Boulevard Gabriel Péri, 92245 MALAKOFF (Métro : Malakoff/Plateau de Vanves (Immeuble "Malakoff 2)).
Abstract: We study an economy where infinitely living agents face uninsurable shocks and are allowed default on their debt. After default, agents are forbidden to participate to financial markets. We present a simple equilibrium allowing for both credit constraints and default. We prove that the optimal allocation includes both credit constraints and default, while the market allocation is associated with too much credit and too many default in equilibrium. Regulation can increase risk-sharing and welfare by introducing debt limits allowing for default.