Demostration of a Competitive Equilibrium with Mortage short-sale
DOI:
https://doi.org/10.35319/lajed.20172842Keywords:
Incomplete financial markets, Colateral guarantees, Competitive equilibriumAbstract
We analyze an economy with incomplete financial markets where there are real assets subject to credit risk and nominal assets free of default. We allow the inclusion of extra-economic penalties in the utility function modeling “short-sales” of mortgage guarantees. We show, under usual hypotheses in preferences and initial endowments, that there is always a competitive equilibrium in our economy.
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References
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