Hens, Thorsten () (Institute for Empirical Research in Economics, University of Zurich) Mayer, Janós () (Institute for Operations Research, University of Zurich) Pilgrim, Beate (Reuters AG, Frankfurt, Germany)
Abstract
We consider economies with additively separable utility functions and give conditions for the two-agents case under which the existence of sunspot equilibria is equivalent to the occurrence of the transfer paradox. This equivalence enables us to show that sunspots cannot matter if the initial economy has a unique spot market equilibrium and there are only two commodities or if the economy has a unique equilibrium for all distributions of endowments induced by asset trade. For more than two agents the equivalence breaks and we give an example for sunspot equilibria even though the economy has a unique equilibrium for all distributions of endowments induced by asset trade.
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Publisher Info
Paper provided by Department of Finance and Management Science, Norwegian School of Economics and Business Administration in its series Discussion Papers with number
2004/15.
Length: 32 pages Date of creation: 22 Nov 2004 Date of revision: Handle: RePEc:hhs:nhhfms:2004_015
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Find related papers by JEL classification: C62 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Existence and Stability Conditions of Equilibrium
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