Equilibrium in economies with financial markets: uniqueness of expectations and indeterminacy

Article Abstract:

The analysis of an economy having a dual period and an asset market and characterized by uncertainty shows the existence of an equilibrium whose characteristic depends on the completeness of the asset market in the first period. Market agents, on the basis of the expected equilibrium situation and, consequently, equilibrium prices, can predict to a good extent future prices amidst the existence of much indeterminacy.

User Contributions:

Comment about this article or add new information about this topic:

Comment:  (50-4000 characters)

Name:

E-mail:

Security Code:

Extrinsic uncertainty and the informational role of prices

Article Abstract:

The existence of an open set of economies with non-revealing equilibria was shown to be dependent on the existence of extrinsic uncertainty, which ultimately determines the distribution of prices within a market. The action of the extrinsic uncertainty was established by treating the problem as an economy defined by two maximization models where future equilibrium prices are given as probability distributions.

User Contributions:

Comment about this article or add new information about this topic:

Comment:  (50-4000 characters)

Name:

E-mail:

Security Code:

Sunspot equilibria and efficiency in economies with incomplete financial markets: a remark

Article Abstract:

Sunspot and nonsunspot equilibria allocations in incomplete financial markets are compared. The economies analyzed have no intrinsic uncertainties, but they do have inside money, which is considered a unique nominal asset. In the equilibrium comparison, sunspot equilibria may, in some cases, be Pareto superior to nonsunspot equilibrium sets.

User Contributions:

Comment about this article or add new information about this topic:

Comment:  (50-4000 characters)

Name:

E-mail:

Security Code: