In our previous paper we built a general equilibrium model of default and punishment in which equilibrium always exists … sales constraints as equilibrium signals. By specializing the default penalties and imposing an exclusivity constraint on …

We extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by … compute how the size of their loan or the price they quote might affect default rates. It also makes for a simple equilibrium … equilibrium always exists in our model, and that default, in conjunction with refinement, opens the door to a theory of endogenous …

Introducing default and limited collateral into general equilibrium theory (GE) allows for a theory of endogenous … asset may default, its drop in price may be much greater than its objective drop in value because the drop in value reduces … information also shortens the horizon over which the asset might default, its price falls still further because the margin …

The possibility of default limits available liquidity. If the potential default draws nearer, a liquidity crisis may … ensue, causing a crash in asset prices, even if the probability of default barely changes, and even if no defaults … subsequently materialize. Introducing default and limited collateral into general equilibrium theory (GE) allows for a theory of …

We extend the standard model of general equilibrium with incomplete markets (GEI) to allow for default. The … equilibrating variables include aggregate default levels, as well as prices of assets and commodities. Default can be either … penalties lambda for default, and the limitations Q on its sale. The model is thus named GE(A,lambda,Q). Each asset is regarded …