IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v13y1999i2p287-308.html
   My bibliography  Save this article

Disaggregation of excess demand and comparative statics with incomplete markets and nominal assets

Author

Listed:
  • Thorsten Hens

    () (Department of Economics, University of Bielefeld, Postfach 100 131, D-33501 Bielefeld, GERMANY)

  • Piero Gottardi

    (Dipartimento di Scienze Economiche, University of Venice, Venice, ITALY)

Abstract

We prove that locally, Walras' law and homogeneity characterize the structure of market excess demand functions when financial markets are incomplete and assets' returns are nominal. The method of proof is substantially different from all existing arguments as the properties of individual demand are also different. We show that this result has important implications and is part of a more general result that excess demand is an essentially arbitrary function not just of prices, but also of the exogenous parameters of the economy as asset returns, preferences, and endowments. Thus locally the equilibrium manifold, relating equilibrium prices to these parameters has also no structure.

Suggested Citation

  • Thorsten Hens & Piero Gottardi, 1999. "Disaggregation of excess demand and comparative statics with incomplete markets and nominal assets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(2), pages 287-308.
  • Handle: RePEc:spr:joecth:v:13:y:1999:i:2:p:287-308
    Note: Received: September 17, 1996; revised version: November 7, 1997
    as

    Download full text from publisher

    File URL: http://link.springer.de/link/service/journals/00199/papers/9013002/90130287.pdf
    Download Restriction: Access to the full text of the articles in this series is restricted

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Piero Gottardi & Andreu Mas-Colell, 1999. "A Note on the Decomposition (at a Point) of Aggregate Excess Demand on the Grassmannian," Working Papers 99-11, Brown University, Department of Economics.
    2. Momi, Takeshi, 2010. "Excess demand function around critical prices in incomplete markets," Journal of Mathematical Economics, Elsevier, vol. 46(3), pages 293-302, May.
    3. Sergio Turner, 2006. "Theory of Demand in Incomplete Markets," Working Papers 2006-07, Brown University, Department of Economics.
    4. JÊrÆme B. Detemple & Piero Gottardi, 1998. "Aggregation, efficiency and mutual fund separation in incomplete markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(2), pages 443-455.
    5. Hens, Thorsten, 2001. "An extension of Mantel (1976) to incomplete markets," Journal of Mathematical Economics, Elsevier, vol. 36(2), pages 141-149, November.
    6. Momi, Takeshi, 2009. "Excess demand functions when new assets are introduced," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1832-1843, July.
    7. Chiaki Hara, 2010. "Pareto Improvement and Agenda Control of Sequential Financial Innovations," KIER Working Papers 748, Kyoto University, Institute of Economic Research.
    8. Douglas W. Blackburn & Andrey D. Ukhov, 2013. "Individual vs. Aggregate Preferences: The Case of a Small Fish in a Big Pond," Management Science, INFORMS, vol. 59(2), pages 470-484, August.
    9. Thorsten Hens, "undated". "An Extension of Mantel (1976) to Incomplete Markets," IEW - Working Papers 071, Institute for Empirical Research in Economics - University of Zurich.
    10. Hara, Chiaki, 2011. "Pareto improvement and agenda control of sequential financial innovations," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 336-345.
    11. Sergio Turner, 2006. "Pareto Improving Financial Innovation in Incomplete Markets," Working Papers 2006-10, Brown University, Department of Economics.
    12. Gottardi, Piero & Mas-Colell, Andreu, 2000. "A note on the decomposition (at a point) of aggregate excess demand on the Grassmannian1," Journal of Mathematical Economics, Elsevier, vol. 33(4), pages 463-473, May.
    13. Momi, Takeshi, 2003. "Excess demand functions with incomplete markets--a global result," Journal of Economic Theory, Elsevier, vol. 111(2), pages 240-250, August.

    More about this item

    Keywords

    Excess demand functions · Incomplete markets.;

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:13:y:1999:i:2:p:287-308. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.