Central counterparties (CCPs) have increasingly become a cornerstone of financial markets infrastructure. We present a model where CCPs are necessary to implement efficient trade when trades are time-critical, liquidity is limited and there is limited enforcement of trades. We then show that --...

We examine the effects of collateralized borrowing in a realistically parameterized life-cycle portfolio choice problem. We provide basic intuition in a two-period model and then solve a multi-period model computationally. Our analysis provides insights into life-cycle portfolio choice relevant...

In this paper, I examine the implications of collateral constraints in a production economy and demonstrate that collateral constraints may have a role to play in resolving two outstanding puzzles: the risk-free rate puzzle and the total factor productivity puzzle. The first puzzle, as noted by...