Date of Award
Spring 2010
Degree Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Graduate Group
Economics
First Advisor
Felix Kubler
Second Advisor
Dirk Krueger
Third Advisor
Andrew Postlewaite
Abstract
General financial models have become workhorse models in the fields of macroeconomics and finance. These models have been developed and extensively studied by general equilibrium theorists. What makes them so applicable for macroeconomics and finance is the well accepted fact that models with a representative agent and without financial frictions yield equilibrium outcomes that are inconsistent with the empirical realities of financial markets. The general financial models are characterized by two main features: heterogeneous agents and financial frictions. The ability of these models to be applied in the fields of macroeconomics and finance in the future depends upon the frontier research in general equilibrium today. Over the past 20 years, research in general equilibrium has predominantly focused on a single friction: incomplete financial markets. The papers contained in this dissertation will analyze the equilibrium effects, both positive and normative, of two seldom researched frictions: bankruptcy and transaction costs. It is the hope that by studying financial frictions in isolation, we may learn which frictions have the greatest effect on welfare, which frictions are most able to be controlled by the government, and how to satisfactorily analyze the equilibrium of a process that is concurrently being restrained by several frictions.
Recommended Citation
Hoelle, Matthew, "Bankruptcy and Transaction Costs in General Financial Models" (2010). Publicly Accessible Penn Dissertations. 119.
https://repository.upenn.edu/edissertations/119