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Credit segmentation in general equilibrium

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  • Cea-Echenique, Sebastián
  • Torres-Martínez, Juan Pablo

Abstract

We build a general equilibrium model with endogenous borrowing constraints compatible with credit segmentation. There are personalized trading restrictions connecting prices with both portfolio constraints and consumption possibilities, a setting which has not thoroughly been addressed by the literature. Our approach is general enough to be compatible with incomplete market economies where there exist wealth-dependent and/or investment-dependent credit access, borrowing constraints precluding bankruptcy, or assets backed by physical collateral.

Suggested Citation

  • Cea-Echenique, Sebastián & Torres-Martínez, Juan Pablo, 2016. "Credit segmentation in general equilibrium," Journal of Mathematical Economics, Elsevier, vol. 62(C), pages 19-27.
    • Handle: RePEc:eee:mateco:v:62:y:2016:i:c:p:19-27
    DOI: 10.1016/j.jmateco.2015.10.011
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    5. Sebastián Cea-Echenique & Juan Pablo Torres-Martínez, 2018. "General equilibrium with endogenous trading constraints," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-10, September.
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    9. Iraola, Miguel A. & Torres-Martínez, Juan Pablo, 2014. "Equilibrium in collateralized asset markets: Credit contractions and negative equity loans," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 113-122.
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    Cited by:

    1. Sebastián Cea-Echenique & Juan Pablo Torres-Martínez, 2018. "General equilibrium with endogenous trading constraints," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-10, September.
    2. Faias, Marta & Torres-Martínez, Juan Pablo, 2017. "Credit market segmentation, essentiality of commodities, and supermodularity," Journal of Mathematical Economics, Elsevier, vol. 70(C), pages 115-122.
    3. Iraola, Miguel A. & Sepúlveda, Fabián & Torres-Martínez, Juan Pablo, 2019. "Financial segmentation and collateralized debt in infinite-horizon economies," Journal of Mathematical Economics, Elsevier, vol. 80(C), pages 56-69.

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    More about this item

    Keywords

    Incomplete markets; General equilibrium; Endogenous trading constraints;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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