Endogenous debt constraints in a life-cycle model with an application to social security

@inproceedings{Andolfatto2008EndogenousDC,
  title={Endogenous debt constraints in a life-cycle model with an application to social security},
  author={David Andolfatto and Martin Gervais},
  year={2008}
}
This paper develops a simple life-cycle model that embeds a theory of debt restrictions based on the existence of inalienable property rights a la Kehoe and Levine [1993. Debt constrained asset markets. Review of Economic Studies 60(4), 865-888; 2001. Liquidity constrained markets versus debt constrained markets. Econometrica 69(3), 575-598]. In our environment, net debtors have the option of defaulting on unsecured debt at the cost of being subjected to wage garnishment and/or having some or… CONTINUE READING

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