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Existence of an equilibrium in incomplete markets with discrete choices and many markets

  • Jonathan Halket

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We define and prove the existence of an equilibrium for Bewley-style models of heterogeneous agents in incomplete markets with discrete and continuous choices. Our sample model also features endogenous price volatility across many markets (locations) but still has a steady state equilibrium with a finite-dimensional state space. Our proof of existence uses Kakutani�s Fixed Point Theorem and does not require the set of households that are indifferent between two discrete choices to be measure zero.

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File URL: http://www.essex.ac.uk/economics/discussion-papers/papers-text/dp711.pdf
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Paper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 711.

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Date of creation: 01 Mar 2012
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Handle: RePEc:esx:essedp:711
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  8. Feldman, Mark & Gilles, Christian, 1985. "An expository note on individual risk without aggregate uncertainty," Journal of Economic Theory, Elsevier, vol. 35(1), pages 26-32, February.
  9. Aiyagari, S Rao, 1994. "Uninsured Idiosyncratic Risk and Aggregate Saving," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 659-84, August.
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