Two-Sided Altruism in an OLG Model with Incomplete Markets and Default

Maldonado, Wilfredo L.; Orrillo, Jaime

doi:10.12660/bre.v26n22006.1580

Cited by 3 publications

(3 citation statements)

References 18 publications

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“…Kuhn-Tucker conditions are satisfied. Hence, Theorem 2 follows by adapting the argument used in Theorem 2 by Maldonado and Orrillo (2006). Details are shown in the next section.…”

Section: Theorem 2 (Non-triviality) If the Utility Functions Are Difmentioning

confidence: 99%

Existence and Non-Triviality of Equilibria in Economies with Default and Government

Orrillo

Filho

2020

Brazilian Review of Econometrics

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This paper attempts to accommodate the government into Dubey, Geanakoplos and Shubik (2005) framework in an explicit way, and proves that a non-trivial equilibrium exists. By non-trivial equilibrium, we mean an equilibrium where there exists trading in the financial markets and some private borrower defaults. The government, characterised by its spending and tax plans\footnote{Both are assumed to be exogenous like in Gale (1990).}, enters our economic model by trading financial assets in order to balance its budget. Proof of existence is made by considering a generalised game \`a la Debreu (1952)\footnote{Already well known in the GEI literature.}, and its non-triviality is obtained by using the non-differentiable optimisation theory.

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“…Kuhn-Tucker conditions are satisfied. Hence, Theorem 2 follows by adapting the argument used in Theorem 2 by Maldonado and Orrillo (2006). Details are shown in the next section.…”

Section: Theorem 2 (Non-triviality) If the Utility Functions Are Difmentioning

confidence: 99%

Existence and Non-Triviality of Equilibria in Economies with Default and Government

Orrillo

Filho

2020

Brazilian Review of Econometrics

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“…2. Maldonado and Orillo (2005) study the link between models with collateral and those with punishment for default. 3.…”

Section: General Context and Related Workmentioning

confidence: 99%

“…Seghir (2003, 2009) incorporate punishments for default similar to those specified in Dubey et al (1989Dubey et al ( , 2000Dubey et al ( , 2005. Within this scheme, Maldonado and Orillo (2003) analyze the problem of infinite horizon in a framework of overlapping generations.…”

Section: General Context and Related Workmentioning

confidence: 99%

On the Properties of General Equilibrium With Default in Economies With Incomplete Markets

Rodríguez

2011

Lat. Am. J. Econ.

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In this paper we study the properties of general equilibrium with default in economies with incomplete markets. It is noted that, in equilibrium, an agent makes two types of comparisons when deciding whether to participate in the credit market: as a lender and as a borrower. As a consequence, the equilibrium can be linked to levels of punishment, perception of default and promised returns. An analysis of equilibrium in the case of economies with two homogeneous types of agents is also presented, from which it can be deduced that in equilibrium under partial default the personal valuations of default for the buyer and the seller are equal.

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