Heterogeneous expectations, collateral constraints and unconventional monetary policy

Aloisio Araujo, Liev Maribondo () and Susan Schommer ()
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Liev Maribondo: IMPA
Susan Schommer: UFRJ

Economics Bulletin, 2018, vol. 38, issue 4, 2064-2072

Abstract: We consider the effects of heterogeneous beliefs in a general equilibrium model with endogenous collateral constraints and unconventional monetary policy. The heterogeneous expectations modify the way in which agents are restricted in the collateral. We numerically show that the relative optimism of the borrower makes him more leveraged and that this increases the welfare gains of unconventional monetary policy.

Keywords: general equilibrium; heterogeneous beliefs; collateral; unconventional monetary policy; Pareto improvement (search for similar items in EconPapers)
JEL-codes: D5 E5 (search for similar items in EconPapers)
Date: 2018-11-06
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