Endogenous Default Penalties in Nominal Incomplete Markets

Nuno Gouveia and Abdelkrim Seghir
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Nuno Gouveia: CERMSEM, Cermsem Cnrs-Umr 8095, Universit¡äe Paris 1
Abdelkrim Seghir: American University in Cairo, Department of Economics

Annals of Economics and Finance, 2009, vol. 10, issue 2, 391-418

Abstract: This paper endogeneizes the utility penalties, initiated by Dubey, Geanakoplos and Shubik (2005), by introducing a benevolent central planner choosing the value of marginal default utility penalties for each consumer. We also prove equilibrium existence with endogenous default penalties for incomplete markets with nominal assets.

Keywords: Equilibrium; Endogenous,default penalties, Incomplete markets, JEL Classification Numbers (search for similar items in EconPapers)
JEL-codes: D52 D91 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2009:v:10:i:2:p:391-418

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