Supplement to "Solving the Feldstein-Horioka Puzzle with Financial Frictions"

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.

Supplemental Authors: 
Yan Bai and Jing Zhang