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 …

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 to allow for default and punishment. The … for asset trade. We show that more lenient punishment which encourages default may be Pareto improving because it allows … for better risk spreading. We also show that default opens the door to a theory of endogenous assets. …

Default rates on instalment loans vary with type of the good purchased. Using an Italian dataset of instalment loans …-specific characteristics, and for the potential selection bias due to credit rationing. We explore whether the residual variation in default … motorcycles on credit are more likely to default on any loan, while those buying kitchen appliances, furniture and computers are …

advantages of debt against the risk of costly default. The costs of default are endogenous: bankrupt firms are forced to … efficient. When the tax rate is positive, the optimal capital structure is uniquely determined, default occurs with positive …

, trading off the tax advantages of debt against the risk of costly default. The costs of bankruptcy are endogenously determined … corporate income tax rate is positive, firms have a unique optimal capital structure. In equilibrium firms default with positive … constrained inefficient. In particular there is too little debt and too little default. …