IDEAS home Printed from https://ideas.repec.org/p/idb/brikps/6095.html
   My bibliography  Save this paper

Private External Overborrowing in Undistorted Economies: Market Failure and Optimal Policy

Author

Listed:
  • Fernández-Arias, Eduardo
  • Lombardo, Davide

Abstract

An undistorted free market economy endowed with perfectly rational and informed agents overborrows, i.e., borrows beyond the efficient level, because of the agents' failure to internalize credit rationing resulting from sovereign risk. It follows that the elimination of the market overborrowing will not cure private overborrowing. This paper explores the possibilities of economic policy as a remedy to the problem.

Suggested Citation

  • Fernández-Arias, Eduardo & Lombardo, Davide, 1998. "Private External Overborrowing in Undistorted Economies: Market Failure and Optimal Policy," IDB Publications (Working Papers) 6095, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:6095
    as

    Download full text from publisher

    File URL: https://publications.iadb.org/publications/english/document/Private-External-Overborrowing-in-Undistorted-Economies-Market-Failure-and-Optimal-Policy.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martín Uribe, 2006. "On Overborrowing," American Economic Review, American Economic Association, vol. 96(2), pages 417-421, May.
    2. Gianluca Benigno & Huigang Chen & Christopher Otrok & Alessandro Rebucci & Eric R. Young, 2011. "Revisiting Overborrowing and its Policy Implications," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Felipe Céspedes & Roberto Chang & Diego Saravia (ed.),Monetary Policy under Financial Turbulence, edition 1, volume 16, chapter 6, pages 145-184, Central Bank of Chile.
    3. Benigno, Gianluca & Chen, Huigang & Otrok, Christopher & Rebucci, Alessandro & Young, Eric R., 2013. "Financial crises and macro-prudential policies," Journal of International Economics, Elsevier, vol. 89(2), pages 453-470.
    4. Kim, Yun Jung & Zhang, Jing, 2012. "Decentralized borrowing and centralized default," Journal of International Economics, Elsevier, vol. 88(1), pages 121-133.
    5. Martín Uribe, 2006. "Individual Versus Aggregate Collateral Constraints and the Overborrowing Syndrome," NBER Working Papers 12260, National Bureau of Economic Research, Inc.
    6. Fernández, Andrés & Rebucci, Alessandro & Uribe, Martín, 2015. "Are capital controls countercyclical?," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 1-14.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:brikps:6095. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Felipe Herrera Library (email available below). General contact details of provider: https://edirc.repec.org/data/iadbbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.