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Temporary Financial Equilibrium

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  • Yves Balasko

Abstract

In a two-period pure exchange economy with financial assets, a temporary financial equilibrium is an equilibrium of the current spot and security markets given forecasts of future prices and returns. The temporary equilib-rium model can then be interpreted as a Walrasian model where preferences depend on prices. This idenfication implies, among other consequences, the generic determinateness of the equilibrium solution. It also highlights the mechanism through which forecasts of future prices parameterize current market prices of goods and assets.

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  • Yves Balasko, "undated". "Temporary Financial Equilibrium," GSIA Working Papers 2000-E45, Carnegie Mellon University, Tepper School of Business.
    • Handle: RePEc:cmu:gsiawp:1141626111
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    File URL: http://econ.tepper.cmu.edu/balasko/0094.pdf
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    Cited by:

    1. Jacques Dreze, 2016. "Existence and multiplicity of temporary equilibria under nominal price rigidities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 279-298, June.
    2. Lionel de Boisdeffre, 2012. "Arbitrage and price revelation with private beliefs," Documents de travail du Centre d'Economie de la Sorbonne 12053, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Monica Violeta ACHIM & Fanuta POP & Sorin ACHIM, 2008. "The Analysis of Financial Equilibrium in the Context of Account Globalization," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(36), pages 225-236, May.
    4. Bhattarai, Keshab, 2014. "Money and economic growth," The Journal of Economic Asymmetries, Elsevier, vol. 11(C), pages 8-18.
    5. Keshab Bhattarai, 2015. "Financial Deepening and Economic Growth in Advanced and Emerging Economies," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 178-195, February.
    6. Jang, Hyo Seok & Lee, Sangjik, 2020. "Equilibria in a large production economy with an infinite dimensional commodity space and price dependent preferences," Journal of Mathematical Economics, Elsevier, vol. 90(C), pages 57-64.
    7. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875, January.
    8. Balasko, Yves, 2003. "Economies with price-dependent preferences," Journal of Economic Theory, Elsevier, vol. 109(2), pages 333-359, April.
    9. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.

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