Asset prices, debt constraints and inefficiency

  title={Asset prices, debt constraints and inefficiency},
  author={Gaetano Bloise and Pietro Reichlin},
  journal={J. Economic Theory},
We consider economies with (possibly endogenous) solvency constraints under uncertainty over an infinite horizon. Constrained inefficiency corresponds to a feasible redistribution yielding a welfare improvement beginning from every contingency reached by the economy. A sort of Cass Criterion (Cass [?]) characterizes constrained inefficiency. This criterion… CONTINUE READING