Aiyagari (1992) shows that equilibria are nonoptimal for an overlapping generations economy if and only if Walras’ Law fails. We demonstrate that this failure represents an earnings opportunity exploitable by unsecured debt issue. When unsecured debt is issued, Walras’ Law holds. JEL Classification: D5, D6, D9

Credit cards and other forms of unsecured debt can be borrowed without underwriting earnings. Forward looking creditworthy households can use unsecured debt during unemployment to support consumption during an earnings shock. This paper uses the Survey of Income and Program Participation (SIPP) data to estimate consumer debt levels of households before, during and after unemployment spells acro...

OBJECTIVE During diagnosis and treatment, patients with cerebral aneurysms receive complex medical information. To study what patients know about their condition, we compared patients' knowledge about their aneurysm-related medical history with information in the medical record. METHODS Neurosurgery clinic outpatients with cerebral aneurysms were interviewed about their history of subarachnoi...

The paper by Heider and Hoerova (2009) is ambitious. It studies the interaction between secured interbank lending, unsecured interbank lending, and banks’ portfolio choices. It is motivated by a puzzling empirical observation, namely the “decoupling of secured and unsecured lending rates” in the Great Financial Crisis of 2007–09. The observation made by Heider and Hoerova is that on August 9, 2...

We use a heterogeneous-agent model, in which labor income is risky and markets are incomplete, to analyze consumer debt portfolios of secured and unsecured debt in the US. Compared with previous research, we emphasize the role of durables which not only generate utility but also serve as debt collateral. This allows a meaningful joint analysis of secured and unsecured debt and introduces endoge...

The paper studies the effects of non-exclusivity of credit card contracts on the provision of insurance through the institution of personal bankruptcy. In our model, lenders can continually observe borrower’s time-varying creditworthiness and provide credit to them by undercutting (poaching) the existing lender(s). Contracts are non-exclusive and, to rollover their debt, borrowers may accept mu...