Extensions - Supplement to "Solving the Feldstein-Horioka Puzzle with Financial Frictions"
Yan Bai and Jing Zhang
Description: PDF file of two technical appendices. Appendix 1 demonstrates how the optimal allocation in the bond-enforcement model can be decentralized into a competitive equilibrium with either national default risk or resident default risk. Appendix 2 describes two alternative strategies to compute the bond-enforcement model.
