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Sunspot Equilibria and the Transfer Paradox

  • Hens, Thorsten

    ()

    (Institute for Empirical Research in Economics, University of Zurich)

  • Pilgrim, Beate

    (Reuters AG, Frankfurt, Germany)

Registered author(s):

    We show that for international economies with two countries, in which agents have additively separable utility functions, the existence of sunspot equilibria is equivalent to the occurrence of the transfer paradox. This equivalence enables us to provide some new insights on the relation of the existence of sunspot equilibria and the multiplicity of spot market equilibria.

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    File URL: http://hdl.handle.net/11250/163694
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    Paper provided by Department of Business and Management Science, Norwegian School of Economics in its series Discussion Papers with number 2004/14.

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    Length: 25 pages
    Date of creation: 22 Nov 2004
    Date of revision:
    Handle: RePEc:hhs:nhhfms:2004_014
    Contact details of provider: Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
    Phone: +47 55 95 92 93
    Fax: +47 55 95 96 50
    Web page: http://www.nhh.no/en/research-faculty/department-of-business-and-management-science.aspx
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    1. Magill, Michael & Shafer, Wayne, 1991. "Incomplete markets," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 30, pages 1523-1614 Elsevier.
    2. Aumann, Robert J., 1974. "Subjectivity and correlation in randomized strategies," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 67-96, March.
    3. Galor, O & Polemarchakis, H M, 1987. "Intertemporal Equilibrium and the Transfer Paradox," Review of Economic Studies, Wiley Blackwell, vol. 54(1), pages 147-56, January.
    4. Maurice Obstfeld, 1995. "Models of Currency Crises with Self-Fulfilling Features," NBER Working Papers 5285, National Bureau of Economic Research, Inc.
    5. Richard C. Barnett & Eric O'N. Fisher, 2002. "Comment on: "Do Sunspots Matter When Spot Market Equilibria Are Unique?"," Econometrica, Econometric Society, vol. 70(1), pages 393-396, January.
    6. Cass, David & Shell, Karl, 1983. "Do Sunspots Matter?," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 193-227, April.
    7. Forges, F. & Peck, J., . "Correlated equilibrium and sunspot equilibrium," CORE Discussion Papers RP -1140, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. repec:cup:cbooks:9780521319867 is not listed on IDEAS
    9. Geanakoplos, John & Heal, Geoffrey, 1983. "A geometric explanation of the transfer paradox in a stable economy," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 223-236.
    10. Hens, Thorsten & Laitenberger, Jorg & Loffler, Andreas, 2002. "Two remarks on the uniqueness of equilibria in the CAPM," Journal of Mathematical Economics, Elsevier, vol. 37(2), pages 123-132, April.
    11. Debreu, Gerard, 1970. "Economies with a Finite Set of Equilibria," Econometrica, Econometric Society, vol. 38(3), pages 387-92, May.
    12. Timothy J. Kehoe, 1990. "Computation and Multiplicity of Equilibria," Discussion Paper Serie A 309, University of Bonn, Germany.
    13. Lahiri, Sajal & Raimondos, Pascalis, 1995. "Welfare effects of aid under quantitative trade restrictions," Journal of International Economics, Elsevier, vol. 39(3-4), pages 297-315, November.
    14. Gottardi, Piero & Kajii, Atsushi, 1999. "The Structure of Sunspot Equilibria: The Role of Multiplicity," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 713-32, July.
    15. Balasko, Yves, 1978. "The Transfer Problem and the Theory of Regular Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 687-94, October.
    16. Maurice Obstfeld, 1994. "The Logic of Currency Crises," NBER Working Papers 4640, National Bureau of Economic Research, Inc.
    17. Dierker, Egbert, 1972. "Two Remarks on the Number of Equilibria of an Economy," Econometrica, Econometric Society, vol. 40(5), pages 951-53, September.
    18. Hens, Thorsten & Mayer, Janós & Pilgrim, Beate, 2004. "Existence of Sunspot Equilibria and Uniqueness of Spot Market Equilibria: The Case of Intrinsically Complete Markets," Discussion Papers 2004/15, Department of Business and Management Science, Norwegian School of Economics.
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