This paper studies economy-wide fluctuations that occur endogenously in the presence of monetary and real assets. Using a standard monetary search model, we consider an economy in which agents can increase consumption, over and above what their liquid monetary asset holdings would allow, pledging real assets as collateral for monetary loans. It is shown that, if the liquidation value of real assets is below full market value, a stable cyclical equilibrium can emerge in consumption and capital around the unstable steady state. We also provide conditions for the existence of cycles of higher order, chaos and sunspot equilibria.

Ferraris, L., Watanabe, M. (2011). Collateral fluctuations in a monetary economy. JOURNAL OF ECONOMIC THEORY, 146(5), 1915-1940 [10.1016/j.jet.2011.06.012].

Collateral fluctuations in a monetary economy

FERRARIS, LEO;
2011

Abstract

This paper studies economy-wide fluctuations that occur endogenously in the presence of monetary and real assets. Using a standard monetary search model, we consider an economy in which agents can increase consumption, over and above what their liquid monetary asset holdings would allow, pledging real assets as collateral for monetary loans. It is shown that, if the liquidation value of real assets is below full market value, a stable cyclical equilibrium can emerge in consumption and capital around the unstable steady state. We also provide conditions for the existence of cycles of higher order, chaos and sunspot equilibria.
Articolo in rivista - Articolo scientifico
Money search; Collateral; Cycles
English
2011
146
5
1915
1940
reserved
Ferraris, L., Watanabe, M. (2011). Collateral fluctuations in a monetary economy. JOURNAL OF ECONOMIC THEORY, 146(5), 1915-1940 [10.1016/j.jet.2011.06.012].
File in questo prodotto:
File Dimensione Formato  
YJETH3969.pdf

Solo gestori archivio

Dimensione 459.91 kB
Formato Adobe PDF
459.91 kB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/311154
Citazioni
  • Scopus 12
  • ???jsp.display-item.citation.isi??? 13
Social impact