Leverage bounds with default and asymmetric information
Bohácek, Radim

Date: 2017
Abstract: This paper analyzes productivity and welfare losses from capital misallocation in a general equilibrium model of occupational choice and financial intermediation. It studies the effects of risk sharing with default and imperfect monitoring on the optimal allocation of resources and derives endogenous leverage bounds. Information frictions have large impact on entrepreneurs' entry and firm-size decisions due to endogenous collateral requirements derived from incentive compatible allocations. Leverage bounds derived from default and asymmetric information constraints are then used to simulate the tradeoff from a macroprudential policy aimed at mitigating the effects of unanticipated changes in information regime.
Abstract: The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
Note: Número d'acord de subvenció EC/H2020/649396
Rights: Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original. Creative Commons
Language: Anglès
Series: Barcelona Graduate School of Economics: ADEMU working paper series
Series: ADEMU Working Paper Series ; 60
Document: workingPaper
Subject: Financial markets and the macroeconomy ; Asymmetric and private information ; Occupational choice

Adreça alternativa: https://hdl.handle.net/10230/32387

42 p, 604.9 KB

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Research literature > Working papers

 Record created 2018-10-23, last modified 2020-08-08

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