This paper examines why the average, real, risk-free interest rate has been so low in heterogeneous-agent, incomplete-insurance economies. The study constructs a pure exchange economy where agents experience idiosyncratic endowment shocks and smooth consumption by holding credit balances. The economy is calibrated and equilibria are characterized using computational methods. The risk-free interest rate generated by the calibrated economy is below those of comparable representative-agent economies. The paper investigates the importance of idiosyncratic shocks and incomplete insurance in determining the risk-free rate. It considers an economy with a continuum of agents, each receiving an endowment of a perishable consumption good. Agents have preferences defined over stochastic processes for consumption, and can smooth consumption by holding a single asset, interpreted as a credit balance. The study calibrates the economy using microeconomic and macroeconomic observations to set values of parameters such as endowments, transition probabilities, discount factor, risk-aversion coefficient, and credit limit. The calibration involves setting the discount factor to 0.993, the risk-aversion coefficient to 1.5, and credit limits to values between -2 and -8. The model is then used to compute equilibria and determine the risk-free rate. The results show that the risk-free rate is negative for sufficiently restrictive credit limits and increases as the credit limit is relaxed. The risk-free rate is also sensitive to changes in the coefficient of relative risk-aversion. The paper concludes that the risk-free rate is lower in heterogeneous-agent economies compared to representative-agent economies, and that the results are sensitive to calibration and model structure. The study highlights the importance of idiosyncratic shocks and incomplete insurance in determining the risk-free rate.This paper examines why the average, real, risk-free interest rate has been so low in heterogeneous-agent, incomplete-insurance economies. The study constructs a pure exchange economy where agents experience idiosyncratic endowment shocks and smooth consumption by holding credit balances. The economy is calibrated and equilibria are characterized using computational methods. The risk-free interest rate generated by the calibrated economy is below those of comparable representative-agent economies. The paper investigates the importance of idiosyncratic shocks and incomplete insurance in determining the risk-free rate. It considers an economy with a continuum of agents, each receiving an endowment of a perishable consumption good. Agents have preferences defined over stochastic processes for consumption, and can smooth consumption by holding a single asset, interpreted as a credit balance. The study calibrates the economy using microeconomic and macroeconomic observations to set values of parameters such as endowments, transition probabilities, discount factor, risk-aversion coefficient, and credit limit. The calibration involves setting the discount factor to 0.993, the risk-aversion coefficient to 1.5, and credit limits to values between -2 and -8. The model is then used to compute equilibria and determine the risk-free rate. The results show that the risk-free rate is negative for sufficiently restrictive credit limits and increases as the credit limit is relaxed. The risk-free rate is also sensitive to changes in the coefficient of relative risk-aversion. The paper concludes that the risk-free rate is lower in heterogeneous-agent economies compared to representative-agent economies, and that the results are sensitive to calibration and model structure. The study highlights the importance of idiosyncratic shocks and incomplete insurance in determining the risk-free rate.