edoc

Outside versus inside bonds: A modigliani-miller type result for liquidity constrained households

Berentsen, Aleksander and Waller, Christopher. (2011) Outside versus inside bonds: A modigliani-miller type result for liquidity constrained households. Journal of economic theory, Vol. 146, H. 5 , S. 1852–1887.

Full text not available from this repository.

Official URL: http://edoc.unibas.ch/dok/A5840143

Downloads: Statistics Overview

Abstract

When agents are liquidity constrained, two options exist — sell assets or borrow. We compare the allocations arising in two economies: in one, agents can sell government bonds (outside bonds) and in the other they can borrow (issue inside bonds). All transactions are voluntary, implying no taxation or forced redemption of private debt. We show that any allocation in the economy with inside bonds can be replicated in the economy with outside bonds but that the converse is not true. However, the optimal policy in each economy makes the allocations equivalent.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Wirtschaftstheorie (Berentsen)
UniBasel Contributors:Berentsen, Aleksander
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:Academic Press
ISSN:1095-7235
Note:Publication type according to Uni Basel Research Database: Journal article
Last Modified:22 Nov 2018 15:00
Deposited On:14 Sep 2012 07:10

Repository Staff Only: item control page