A note on borrowing limits and welfare

Francesc Obiols-Homs () and Albert Marcet

No 276, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: We study the effect of a borrowing limit on aggregate welfare in the context of an incomplete markets economy a la Aiyagari anf Huggett. We show that a larger borrowing limit is not necessarily welfare-improving.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed007:276

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