This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty … consumption contingent on aggregate shocks in financial markets. The first result is that if aggregate and idiosyncratic shocks … aggregate states in which consumption is more volatile. For instance, this can provide an efficiency justification for the …

This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty … consumption contingent on aggregate shocks in financial markets. The first result is that if aggregate and idiosyncratic shocks … aggregate states in which consumption is more volatile. For instance, this can provide an efficiency justification for the …

show that a boom-bust cycle in debt, asset prices and consumption characterizes the equilibrium dynamics of a model with a …

factors behind the U.S. credit crisis. We show that a boom-bust cycle in debt, asset prices and consumption characterizes the …