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.
Si
Articolo in rivista - Articolo scientifico
Scientifica
Money search; Collateral; Cycles
English
1915
1940
26
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].
Ferraris, L; Watanabe, M
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10281/311154
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