The set of sunspot equilibria in economies with incomplete financial markets: variable asset prices
AbstractI consider the set of equilibria of two-period economies with S extrinsic states of nature in the second period and I assets with linearly independent nominal payoffs. Asset prices are variable. If the number of agents is greater than (S-I), the payoff matrix is in general position and S $\ge$ 2I, the set of equilibrium allocations generically (in utility function space) contains a smooth manifold of dimension (S-1). Moreover, the map from states o f nature to equilibrium allocations (restricted to this manifold) is one-to-one at each equilibrium.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 18 (2001)
Issue (Month): 3 ()
Note: Received: February 23, 1998; revised version: June 1, 2000
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Find related papers by JEL classification:
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
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- Alessandro, CITANNA & SCHMEDDERS, Karl, 2002.
"Controlling price volatility through financial innovation,"
Les Cahiers de Recherche
749, HEC Paris.
- Alessandro Citanna & Karl Schmedders, 2002. "Controlling Price Volatility Through Financial Innovation," Discussion Papers 1338, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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