Competitive equilibria with limited enforcement

• 成果类型: Article; Proceedings Paper
• 署名作者: Kehoe, PJ; Perri, F
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Minnesota System; University of Minnesota Twin Cities; National Bureau of Economic Research; New York University; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/S0022-0531(03)00255-2
• 发表日期: 2004
• 页码: 184-206
• 关键词: Incomplete markets; risk-sharing; enforcement constraints; Sovereign debt; decentralization; Sustainable equilibrium; default

摘要

We show how to decentralize constrained efficient allocations that arise from enforcement constraints between sovereign nations. In a pure exchange economy these allocations can be decentralized with private agents acting competitively and taking as given government default decisions on foreign debt. In an economy with capital these allocations can be decentralized if the government can tax capital income as well as default on foreign debt. The tax on capital income is needed to make private agents internalize a subtle externality. The decisions of the government can arise as an equilibrium of a dynamic game between governments. (C) 2003 Elsevier Inc. All rights reserved.