Artikel
Sustainable debt
We show that debt is sustainable at a competitive equilibrium based solely on the reputation for repayment; that is, even without collateral or legal sanctions available to creditors. In an incomplete asset market, when the rate of interest falls recurrently below the rate of growth of the economy, self-insurance is more costly than borrowing, and repayments on loans are enforced by the implicit threat of loss of the risk-sharing advantages of debt contracts. Private debt credibly circulates as a form of inside money, and it is not valued as a speculative bubble. Competitive equilibria with self-enforcing debt exist under a suitable hypothesis of gains from trade.
- Sprache
-
Englisch
- Erschienen in
-
Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 16 ; Year: 2021 ; Issue: 4 ; Pages: 1513-1555 ; New Haven, CT: The Econometric Society
- Klassifikation
-
Wirtschaft
Incomplete Markets
International Lending and Debt Problems
National Debt; Debt Management; Sovereign Debt
- Thema
-
Rate of interest
self-enforcing debt
Ponzi games
incomplete markets
competitive equilibrium
gains from trade
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Bloise, Gaetano
Polemarchakis, Heraklis M.
Vailakis, Y.
- Ereignis
-
Veröffentlichung
- (wer)
-
The Econometric Society
- (wo)
-
New Haven, CT
- (wann)
-
2021
- DOI
-
doi:10.3982/TE4173
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Bloise, Gaetano
- Polemarchakis, Heraklis M.
- Vailakis, Y.
- The Econometric Society
Entstanden
- 2021
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