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Debt and welfare in economies with land

Author

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  • Nikolaos Kokonas

    (University of Bath)

  • Herakles Polemarchakis

    (University of Warwick)

Abstract

In a stochastic economy of overlapping generations subject to uninsurable risks, debt can implement Pareto improvements in welfare. This is the case even in the presence of long-lived assets and no short sales.

Suggested Citation

  • Nikolaos Kokonas & Herakles Polemarchakis, 2017. "Debt and welfare in economies with land," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(4), pages 805-824, December.
    • Handle: RePEc:spr:joecth:v:64:y:2017:i:4:d:10.1007_s00199-016-0986-z
    DOI: 10.1007/s00199-016-0986-z
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    References listed on IDEAS

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    Cited by:

    1. Cristina Arellano & Timothy J. Kehoe & Herakles Polemarchakis, 2017. "Introduction to the Special Issue on Models of Debt and Debt Crises," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(4), pages 605-610, December.

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    More about this item

    Keywords

    Long-lived assets; Optimality; Overlapping generations;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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