Credit Markets, Limited Commitment, and Government Debt

• 成果类型: Article
• 署名作者: Carapella, Francesca; Williamson, Stephen
• 署名单位: Federal Reserve System - USA; Washington University (WUSTL); Federal Reserve System - USA; Federal Reserve Bank - St. Louis
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdv006
• 发表日期: 2015
• 页码: 963-990
• 关键词: money; PRIVATE; POLICY

摘要

Adynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for government debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and government debt essentially plays a role as collateral and thus improves borrowers' incentives. The provision of government debt acts to discourage default, whether default occurs in equilibrium or not.