Abstract
This article considers a pure-endowment stationary stochastic overlapping generations economy, in which agents have maxmin expected utility preferences. Two main results are obtained. First, we show that multiple stationary monetary equilibria exist. Consequently, real and price indeterminacies arise under the assumption that aggregate shock exists. Second, we show that each of these stationary monetary equilibria is conditionally Pareto optimal, i.e., no other stationary allocations strictly Pareto dominate the equilibrium allocations.
| Original language | English |
|---|---|
| Pages (from-to) | 435-459 |
| Number of pages | 25 |
| Journal | Economic Theory |
| Volume | 59 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2015 Jun 3 |
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Keywords
- Conditional Pareto optimality
- Indeterminacy
- Maxmin expected utility
- Money
- Stochastic overlapping generations model
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Monetary equilibria and Knightian uncertainty. / Ohtaki, Eisei; Ozaki, Hiroyuki.
In: Economic Theory, Vol. 59, No. 3, 03.06.2015, p. 435-459.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Monetary equilibria and Knightian uncertainty
AU - Ohtaki, Eisei
AU - Ozaki, Hiroyuki
PY - 2015/6/3
Y1 - 2015/6/3
N2 - This article considers a pure-endowment stationary stochastic overlapping generations economy, in which agents have maxmin expected utility preferences. Two main results are obtained. First, we show that multiple stationary monetary equilibria exist. Consequently, real and price indeterminacies arise under the assumption that aggregate shock exists. Second, we show that each of these stationary monetary equilibria is conditionally Pareto optimal, i.e., no other stationary allocations strictly Pareto dominate the equilibrium allocations.
AB - This article considers a pure-endowment stationary stochastic overlapping generations economy, in which agents have maxmin expected utility preferences. Two main results are obtained. First, we show that multiple stationary monetary equilibria exist. Consequently, real and price indeterminacies arise under the assumption that aggregate shock exists. Second, we show that each of these stationary monetary equilibria is conditionally Pareto optimal, i.e., no other stationary allocations strictly Pareto dominate the equilibrium allocations.
KW - Conditional Pareto optimality
KW - Indeterminacy
KW - Maxmin expected utility
KW - Money
KW - Stochastic overlapping generations model
UR - http://www.scopus.com/inward/record.url?scp=84930767614&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84930767614&partnerID=8YFLogxK
U2 - 10.1007/s00199-015-0887-6
DO - 10.1007/s00199-015-0887-6
M3 - Article
AN - SCOPUS:84930767614
VL - 59
SP - 435
EP - 459
JO - Economic Theory
JF - Economic Theory
SN - 0938-2259
IS - 3
ER -