future exchange rates. We interpret this property as showing that, in general, there is no clear-cut effect on welfare of the …

welfare within an infinite-horizon asset-pricing model with heterogeneous agents. In our model, the ability of agents to re … decreasing as these limits become tighter, yet the impact on welfare is non-monotone. In the model, allowing for some re-use can … improve welfare as it enables agents to share risk more effectively. Allowing reuse beyond intermediate levels, however, can …

We assess the quantitative implications of collateral re-use on leverage, volatility, and welfare within an infinite … tighter, yet the impact on welfare is non-monotone. In the model, allowing for some re-use can improve welfare as it enables … lower welfare. So the analysis in this paper provides a rationale for limiting, yet not banning, re-use in financial markets. …