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Collateral constraints and rental markets

d’Albis, Hippolyte and Eleni Iliopulos
Authors registered in the RePEc Author Service: Hippolyte d'Albis ()

Economics Letters, 2013, vol. 121, issue 3, 436-439

Abstract: We study a benchmark model with collateral constraints and heterogeneous discounting. Contrarily to a rich literature on borrowing limits, we allow for rental markets. By incorporating this missing market, we show that impatient agents choose to rent rather than to own the collateral in the neighborhood of the deterministic steady state. Consequently, impatient agents are not indebted and borrowing constraints play no role in local dynamics.

Keywords: Heterogeneous discounting; Collateral constraints; Rental market; Credit market (search for similar items in EconPapers)
JEL-codes: E30 R31 (search for similar items in EconPapers)
Date: 2013
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