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Sunspots, whether they are risk or uncertainty, cannot matter in the static Arrow-Debreu economy

Author

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  • Eisei Ohtaki

    (Graduate School of Economics, Keio University)

Abstract

It is well-known that in the static Arrow-Debreu economy with complete markets, extrinsic uncertainty cannot matter. This paper re-examines this result when agents preferences exhibit aversion to Knightian uncertainty. We then show that extrinsic uncertainty still cannot matter.

Suggested Citation

  • Eisei Ohtaki, 2010. "Sunspots, whether they are risk or uncertainty, cannot matter in the static Arrow-Debreu economy," Economics Bulletin, AccessEcon, vol. 30(2), pages 961-966.
    • Handle: RePEc:ebl:ecbull:eb-09-00817
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Extrinsic uncertainty; Knightian uncertainty; Arrow-Debreu economy; Rational expectations equilibrium.;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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