This paper explores equilibrium theory of wealth accumulation and wealth inequality when entrepreneurs have collateral … constraints and are subject to idiosyncratic productivity shocks. The model is an extension of Kiyotaki-Moore's setting to …

examples is the Kiyotaki-Moore (1997) credit cycles model. There, collateral constraints play a fundamental role generating, at … the collateral constraints, we assume that markets are complete and, in particular, we consider a full set of Arrow … pricing implications and, finally, the welfare consequences of collateral constraints. That is, to be confident with our …

example, Kiyotaki and Moore (1997) and Kocherlakota (2000). Except for those collateral constraints we assume that markets are … complete, considering a full set of Arrow securities. Our main focus is on the quantitative impact of collateral constraints on … welfare issues in such a model. The crucial aspect of our approach is that collateral constraints are occasionally binding …

which exchange rate sensitive collateral constraints may bind in some states of the world. The appeal of the model is that … it allows for a complete analytical description of the effects of collateral constraints, and admits a full … monetary policy described above – in particular, that optimal monetary policy may be pro-cyclical under binding collateral …

This paper studies the role of collateral constraints in transforming small monetary shocks into large persistent …

-cycle model where households face collateral constraints that tie their credit capacity to the value of their houses and examine … extract utility from their homes, landlords that obtain rents, and investors. We show that an economy with tighter collateral … constraints is more prone to bubbles which, in turn, tend to have a larger size but are less fragile in face of funddraining …

collateral constraints. Second, credit flows are intermediated by monopolistically competitive banks, thus giving rise to …