Our objective in this article is to study analytically the effect of borrowing constraints on asset returns. We explicitly characterize the equilibrium for an exchange economy with two agents who differ in their risk aversion and are prohibited from borrowing. In a representative-agent economy with CRRA preferences, the Sharpe ratio of equity returns and the riskfree rate are linked by the risk...

Models of investment and borrowing for education typically treat the family as a unitary decision-maker. Doing so may conceal the nature of borrowing constraints, since adults with college-age children are likely at a life-cycle stage where credit constraints are not important. We instead propose a simple model of altruistic parents and a child where both parties can make investments for educat...

It is often the case that banks in the US are willing to borrow in the fed funds market (the interbank market for funds) at higher rates than the ones they could obtain by borrowing at the Fed’s discount window. This phenomenon is commonly explained as the consequence of the existence of a stigma effect attached to borrowing from the window. We provide a model where market participants may rega...

Financial market frictions distort the allocation of resources among productive units—all else equal, firms whose financing choices are affected by financial frictions face higher borrowing costs than firms with ready access to capital markets. As a result, input choices may differ systematically across firms in ways that are unrelated to their productive efficiency. We propose a simple account...

Is the observed large increase in consumer indebtedness since the 1980s beneficial for U.S. consumers? This paper quantitatively studies the macroeconomic and welfare implications of relaxing borrowing constraints when consumers exhibit a hyperbolic discounting preference. The model can capture two contrasting views: the positive view, which links increased indebtedness to financial innovation ...

BACKGROUND Prescription medication borrowing and sharing is a behaviour that has been identified in patients of all ages. This behaviour is recognised by medical researchers and government health authorities as a potential risk factor in adverse drug events across the community. OBJECTIVE This article discusses prescription medication borrowing and sharing and identifies populations more like...

This paper looks at public sector debt in developing countries, being concerned specifically with the relationship between aid inflows and the public sector borrowing requirement net of aid loans. After examining the public sector budget constraint and various conditions under which aid might lead to an increase in this borrowing, the paper surveys the empirical results of literature on aid and...

Large vocabulary continuous speech recognition is always a difficult task, and it is particularly so for low-resource languages. The scenario we focus on here is having only 1 hour of acoustic training data in the “target” language. This paper presents work on a data borrowing strategy combined with the recently proposed Subspace Gaussian Mixture Model (SGMM). We developed data borrowing strate...

AIMS To give a detailed description of injection-related risk behaviours, and to estimate the relative importance of these behaviours with regard to HIV transmission. DESIGN The present study was part of the Amsterdam Cohort Study of drug users. SETTING In Amsterdam, a city with extensive preventive measures, large HIV-risk reductions have taken place, but no further decreases have occurred...