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Bankruptcy in general equilibrium
Sabarwal, Tarun
Sabarwal, Tarun
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Abstract
In this paper, I construct a model of an exchange economy in which bankruptcy arises in a manner similar to what we observe. This model is a more realistic representation of some markets in which intertemporal assets are traded. Using standard and natural assumptions, I show that every economy represented by this model has an equilibrium. Using examples, I highlight some welfare effects of bankruptcy.
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Date
2000
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Board of Governors of the Federal Reserve System
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Keywords
Bankruptcy, General equilibrium, Incomplete markets, Exemption, Credit limit
Citation
Sabarwal, Tarun, (2000), Bankruptcy in general equilibrium, No 2000-48, Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.).