• Graduate program
    • Why Tinbergen Institute?
    • Research Master
    • Admissions
    • Course Registration
    • Facilities
    • PhD Vacancies
    • Selected PhD Placements
    • Research Master Business Data Science
  • Research
  • Browse our Courses
  • Events
    • Summer School
      • Applied Public Policy Evaluation
      • Deep Learning
      • Economics of Blockchain and Digital Currencies
      • Economics of Climate Change
      • Foundations of Machine Learning with Applications in Python
      • From Preference to Choice: The Economic Theory of Decision-Making
      • Gender in Society
      • Machine Learning for Business
      • Marketing Research with Purpose
      • Sustainable Finance
      • Tuition Fees and Payment
      • Business Data Science Summer School Program
    • Events Calendar
    • Events Archive
    • Tinbergen Institute Lectures
    • 16th Tinbergen Institute Annual Conference
    • Annual Tinbergen Institute Conference
  • News
  • Alumni

Ferraris, L. and Watanabe, M. (2011). Collateral fluctuations in a monetary economy Journal of Economic Theory, 146(5):1915--1940.

  • Affiliated author
    Makoto Watanabe
  • Publication year
    2011
  • Journal
    Journal of Economic Theory
View publication

This paper studies economy-wide fluctuations that occur endogenously in the presence of monetary and real assets. Using a standard monetary search model, we consider an economy in which agents can increase consumption, over and above what their liquid monetary asset holdings would allow, pledging real assets as collateral for monetary loans. It is shown that, if the liquidation value of real assets is below full market value, a stable cyclical equilibrium can emerge in consumption and capital around the unstable steady state. We also provide conditions for the existence of cycles of higher order, chaos and sunspot equilibria. {\textcopyright} 2011 Elsevier Inc.