Gaetano Antinolfi (Department of Economics, Cornell University, 404 Uris Hall, Ithaca, NY 14853-7601, USA) Todd Keister (Department of Economics, Cornell University, 404 Uris Hall, Ithaca, NY 14853-7601, USA)
Additional information is available for the following
registered author(s):
We study sunspot immunity in a dynamic monetary economy in which consumers are allowed to trade put and call option contracts on the general price level. We define the concept of strong sunspot immunity to characterize economies that have no sunspot equilibria regardless of the number of extrinsic states and their probabilities of occurrence. We show that a small number of option contracts can make an economy strongly sunspot immune. In addition, we demonstrate how asset re-trading opportunities, and the associated capital gains and losses, reduce the number of options needed for this result to obtain.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Article provided by Springer in its journal Economic Theory.
For technical questions regarding this item, or to correct its listing, contact: (Christopher F Baum).
Related research
Keywords:
Find related papers by JEL classification: D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)