Multiple Equilibria in Open Economies with Collateral Constraints

Autor:	Stephanie Schmitt-Grohé, Martín Uribe
Rok vydání:	2020
Předmět:	Economics and Econometrics Precautionary savings Economy Collateral 0502 economics and business 05 social sciences Value (economics) Economics Context (language use) Open economy 050207 economics 050205 econometrics
Zdroj:	The Review of Economic Studies. 88:969-1001
ISSN:	1467-937X 0034-6527
DOI:	10.1093/restud/rdaa023
Popis:	This article establishes the existence of multiple equilibria in infinite-horizon open economy models in which the value of tradable and non-tradable endowments serves as collateral. In this environment, the economy displays self-fulfilling financial crises in which pessimistic views about the value of collateral induce agents to deleverage. Under plausible calibrations, there exist equilibria with underborrowing. This result stands in contrast to the overborrowing result stressed in the related literature. Underborrowing emerges in the present context because in economies that are prone to self-fulfilling financial crises, individual agents engage in excessive precautionary savings as a way to self-insure.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::97d791b9fa5df00cc2c2c53df794b713 https://doi.org/10.1093/restud/rdaa023 Zobrazit plný text záznamu