Recent papers

G. Bloise, P. Reichlin and M. Tirelli
Indeterminacy of Competitive Equilibrium with Risk of Default (2009)
We prove indeterminacy of competitive equilibrium in sequential economies, where limited commitment requires the endogenous determination of solvency constraints preventing debt repudiation (Alvarez and Jermann (2000)). In particular, we show that, for any arbitrary value of social welfare in between autarchy and (constrained) optimality, there exists an equilibrium at which social welfare attains this value. Our method consists in restoring Welfare Theorems for a weak notion of (constrained) optimality. The latter, inspired by Malinvaud (1953), corresponds to the absence of Pareto improving feasible redistributions over (however long) finite horizons, along with some limited validity of social transversality.

G. Bloise and P. Reichlin
Asset Prices, Debt Constraints and Inefficiency (2008)
In this paper, we consider economies with (possibly endogenous) solvency constraints under uncertainty. Constrained inefficiency corresponds to a feasible redistribution yielding a welfare improvement beginning from every contingency reached by the economy. A sort of Cass (1972) Criterion completely characterizes constrained inefficiency. This criterion involves only observable prices and requires low interest rates in the long-run, exactly as in economies with overlapping generations. In addition, when quantitative limits to liabilities arise from participation constraints, a feasible welfare improvement, subject to participation, coincides with the introduced notion of constrained inefficiency.

G. Bloise and H.M. Polemarchakis
An Argument for Positive Nominal Interest (2005)
In a dynamic economy, such as an economy of overlapping generations, money provides liquidity and is dominated as a store of value. A central bank, that sets the nominal rate of interest and distributes its profit to shareholders as dividends, is traded on the asset market. Nominal rates of interest that tend to zero, but do not vanish, eliminate equilibrium allocations that do not converge to a Pareto optimal allocation.