We analyze the removal of the credit-risk guarantees provided by the government-sponsored enterprises (GSEs) in a model with agents heterogeneous in income and house price risk. We find that wealth inequality increases, driven by higher mortgage spreads and housing rents. Housing holdings become...

This article discusses how macroeconomic arguments should shape the design of mortgage contracts. Mortgage recourse systems, by discouraging default, magnify the impact of nominal rigidities and cause deeper and more persistent recessions. Default mitigates liquidity traps because it...

We model a Cournot duopoly market in which a CSR firm interacts with a profit maximizing firm and where the market is regulated with Pigouvian taxation. We consider three different kinds of CSR firm behaviors: (i) consumer-friendly; (ii) environmentally-friendly; and (iii) consumer-environment...

We consider the pricing of a uniformly mixed pollutant when enforcement is costly with a model of optimal, possibly firm-specific, emissions taxes and their enforcement. We argue that optimality requires an enforcement strategy that induces full compliance by every firm. This holds whether or...