Bankruptcy in general equilibrium

Tarun Sabarwal

No 2000-48, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: In this paper, I construct a model of an exchange economy in which bankruptcy arises in a manner similar to what we observe. This model is a more realistic representation of some markets in which intertemporal assets are traded. Using standard and natural assumptions, I show that every economy represented by this model has an equilibrium. Using examples, I highlight some welfare effects of bankruptcy.

Keywords: Bankruptcy; Econometric models (search for similar items in EconPapers)
Date: 2000
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