Bloise, Gaetano; Polemarchakis, Heraklis M.; Vailakis, Y. - In: Theoretical economics : TE ; an open access journal in … 16 (2021) 4, pp. 1513-1555
We show that debt is sustainable at a competitive equilibrium based solely on the reputation for repayment; that is, even without collateral or legal sanctions available to creditors. In an incomplete asset market, when the rate of interest falls recurrently below the rate of growth of the...
