Code for "Online Appendix: Optimal Financial Exclusion"
Principal Investigator(s): View help for Principal Investigator(s) Erwan Quintin, University of Wisconsin -- Madison; Cyril Monnet, University of Bern
Version: View help for Version V2
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text/plain | 1.5 KB | 06/02/2020 08:08:AM |
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text/x-objcsrc | 3.6 KB | 01/03/2019 11:20:AM |
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Project Citation:
Quintin, Erwan, and Monnet, Cyril . Code for “Online Appendix: Optimal Financial Exclusion.” Nashville, TN: American Economic Association [publisher], 2021. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-10-21. https://doi.org/10.3886/E119700V2
Project Description
Summary:
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This archive contains the code necessary to produce figure 1 in the online appendix for "Optimal Financial Exclusion"
Abstract: We study efficient exclusion policies in a canonical credit model that features both exogenous and strategic default along the equilibrium path. Policies that maximize welfare in a stationary equilibrium implement exclusion for a finite and deterministic number of periods following default. Front-loading exclusion makes the mass of socially valuable transactions as high as it can be in steady state. Less intuitively, doing so also maximizes the average welfare of excluded agents in equilibrium conditional on the level of incentives provided by the threat of exclusion. We argue that these results are robust to a host of natural variations on our benchmark model.
Keywords: endogenous default, exclusion
JEL codes: D52; D82
Manuscript number: AEJMicro-2019-0005
Abstract: We study efficient exclusion policies in a canonical credit model that features both exogenous and strategic default along the equilibrium path. Policies that maximize welfare in a stationary equilibrium implement exclusion for a finite and deterministic number of periods following default. Front-loading exclusion makes the mass of socially valuable transactions as high as it can be in steady state. Less intuitively, doing so also maximizes the average welfare of excluded agents in equilibrium conditional on the level of incentives provided by the threat of exclusion. We argue that these results are robust to a host of natural variations on our benchmark model.
Keywords: endogenous default, exclusion
JEL codes: D52; D82
Manuscript number: AEJMicro-2019-0005
Scope of Project
Subject Terms:
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Endogenous default;
Exclusion
JEL Classification:
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D52 Incomplete Markets
D82 Asymmetric and Private Information; Mechanism Design
D52 Incomplete Markets
D82 Asymmetric and Private Information; Mechanism Design
Data Type(s):
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program source code
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