Endogenous trading constraints with incomplete asset markets

• 成果类型: Article
• 署名作者: Abraham, Arpad; Carceles-Poveda, Eva
• 署名单位: European University Institute; State University of New York (SUNY) System; Stony Brook University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2009.10.006
• 发表日期: 2010
• 页码: 974-1004
• 关键词: Endogenous borrowing constraints; incomplete markets; Production; Tax reform

摘要

This paper endogenizes the borrowing constraints on capital in a production economy with incomplete markets. We find that these limits get looser with income, a property that is consistent with US data on credit limits. The framework with endogenous limits is then used to study the effects of a revenue neutral tax reform that eliminates capital income taxes. Our results illustrate that it is very important to take into account the effects of tax policies on the limits. Throughout the transition, these effects can be big enough to change the overall conclusion about the desirability of a tax reform. (C) 2009 Elsevier Inc. All rights reserved.