We determine optimal government default policies for a small open economy in which a domestic government can borrow internationally by issuing non-contingent debt contracts. Unlike earlier work, we consider optimal default policies under full government commitment and treat repayment of...

In this paper we examine the effect of collateral constraints and margin requirements on the prices of long-lived assets. We consider a Lucas-style infinite-horizon exchange economy with heterogenous agents and collateral constraints. In our calibrated economy collateral constraints lead to a...