In the Great Contraction, regions of the United States that experienced the largest change in household debt to income ratios also experienced the largest drops in output and employment. Such output drops not only occurred for firms that sell primarily to a local region but also for regional...

We consider a nonlinear pricing model, in which consumers' marginal willingness to pay and absolute ability to pay are noncontractible, to explain the nonlinearity of unit prices of basic food items (bulk discounting) in developing countries. We allow consumers to face binding budget-constraints...