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Full-Text Articles in Social and Behavioral Sciences
Interpretation And Construction In Altering Rules, Gregory Klass
Interpretation And Construction In Altering Rules, Gregory Klass
Georgetown Law Faculty Publications and Other Works
This essay is a response to Ian Ayres's, "Regulating Opt-Out: An Economic Theory of Altering Rules," 121 Yale L.J. 2032 (2012). Ayres identifies an important question: How does the law decide when parties have opted-out of a contractual default? Unfortunately, his article tells only half of the story about such altering rules. Ayres cares about rules designed to instruct parties on how to get the terms that they want. By focusing on such rules he ignores altering rules designed instead to interpret the nonlegal meaning of the parties' acts or agreement. This limited vision is characteristic of economic approaches to …
Who Defaults On Their Home Mortgage?, Eric Doviak, Sean P. Macdonald
Who Defaults On Their Home Mortgage?, Eric Doviak, Sean P. Macdonald
Publications and Research
Since Feb. 13, 2010, detailed information on every home mortgage default and foreclosure in New York State must be filed with the New York State Department of Financial Services (DFS). The data come from pre-foreclosure filing (PFF) notices that mortgage servicers must send to both the borrower and the DFS 90 days prior to initiating the foreclosure process and when a foreclosure has commenced. Pairing the PFF data with data on originations from the Home Mortgage Disclosure Act (HMDA) reveals the race and ethnicity of borrowers who defaulted on their home mortgages. HMDA analyses consistently reveal strong racial and ethnic …
Leverage And Default In Binomial Economies: A Complete Characterization, Ana Fostel, John Geanakoplos
Leverage And Default In Binomial Economies: A Complete Characterization, Ana Fostel, John Geanakoplos
Cowles Foundation Discussion Papers
Our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral. Our Binomial No-Default Theorem states that any equilibrium is equivalent (in real allocations and prices) to another equilibrium in which there is no default. Thus actual default is irrelevant, though the potential for default drives the equilibrium and limits borrowing. This result is valid with arbitrary preferences and endowments, contingent or non-contingent promises, many assets and consumption goods, production, and multiple periods. We also show that no-default equilibria would be selected if there were the slightest cost of using collateral or …
Endogenous Leverage In A Binomial Economy: The Irrelevance Of Actual Default, Ana Fostel, John Geanakoplos
Endogenous Leverage In A Binomial Economy: The Irrelevance Of Actual Default, Ana Fostel, John Geanakoplos
Cowles Foundation Discussion Papers
We show that binomial economies with financial assets are an informative and tractable model to study endogenous leverage and collateral equilibrium: endogenous leverage can be highly volatile, but it is always easy to compute. The possibility of default can have a dramatic effect on equilibrium, if collateral is scarce, yet we prove the No-Default Theorem asserting that, without loss of generality, there is no default in equilibrium. Thus potential default has a dramatic effect on equilibrium, but actual default does not. This result is valid with arbitrary preferences, contingent promises, many assets and consumption goods, production, and multiple periods. On …
Leverage And Default In Binomial Economies: A Complete Characterization, Ana Fostel, John Geanakoplos
Leverage And Default In Binomial Economies: A Complete Characterization, Ana Fostel, John Geanakoplos
Cowles Foundation Discussion Papers
Our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral. First, our Binomial No-Default Theorem states that any equilibrium is equivalent (in real allocations and prices) to another equilibrium in which there is no default. Thus actual default is irrelevant, though the potential for default drives the equilibrium and limits borrowing. This result is valid with arbitrary preferences and endowments, arbitrary promises, many assets and consumption goods, production, and multiple periods. We also show that the no-default equilibrium would be selected if there were the slightest cost of using collateral or …
Leverage And Default In Binomial Economies: A Complete Characterization, Ana Fostel, John Geanakoplos
Leverage And Default In Binomial Economies: A Complete Characterization, Ana Fostel, John Geanakoplos
Cowles Foundation Discussion Papers
Our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral. Our Binomial No-Default Theorem states that any equilibrium is equivalent (in real allocations and prices) to another equilibrium in which there is no default. Thus actual default is irrelevant, though the potential for default drives the equilibrium and limits borrowing. This result is valid with arbitrary preferences and endowments, contingent or non-contingent promises, many assets and consumption goods, production, and multiple periods. We also show that no-default equilibria would be selected if there were the slightest cost of using collateral or …
The Upside Of Government Default, Jeffrey Rogers Hummel
The Upside Of Government Default, Jeffrey Rogers Hummel
Faculty Publications
No abstract provided.
Some Possible Consequences Of A U.S. Government Default, Jeffrey Rogers Hummel
Some Possible Consequences Of A U.S. Government Default, Jeffrey Rogers Hummel
Faculty Publications
The U.S. government faces a looming fiscal crisis. A default on Treasury securities appears inevitable. The short-run consequences for the economy will be painful. But the long-run consequences, both economic and political, could be beneficial. The most important long-run political benefit would be the imposition of fiscal discipline. The long-run economic benefit would be the alleviation of the future tax liabilities required to service the national debt, irrespective of whether those liabilities are correctly anticipated or not. A historical examination of the state government defaults of the 1840s provides one case study where the long-run consequences were indeed salutary.