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Aggregate Consequences of Limited Contract Enforceability / Thomas Cooley, Ramon Marimon, Vincenzo Quadrini.
- Format:
- Book
- Author/Creator:
- Cooley, Thomas.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w10132.
- NBER working paper series no. w10132
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2003.
- Summary:
- We study a general equilibrium model in which entrepreneurs finance investment with optimal financial contracts. Because of enforceability problems, contracts are constrained efficient. We show that limited enforceability amplifies the impact of technological innovations on aggregate output. More generally, we show that lower enforceability of contracts will be associated with greater aggregate volatility. A key assumption for this result is that defaulting entrepreneurs are not excluded from the market.
- Notes:
- Print version record
- December 2003.
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