Monetary equilibria and Knightian uncertainty

Eisei Ohtaki, Hiroyuki Ozaki

Research output: Contribution to journalArticle

3 Citations (Scopus)

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 languageEnglish
Pages (from-to)435-459
Number of pages25
JournalEconomic Theory
Volume59
Issue number3
DOIs
Publication statusPublished - 2015 Jun 3

Fingerprint

Knightian uncertainty
Monetary equilibrium
Endowments
Utility preference
Overlapping generations
Pareto
Maxmin expected utility

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 journalArticle

Ohtaki, Eisei ; Ozaki, Hiroyuki. / Monetary equilibria and Knightian uncertainty. In: Economic Theory. 2015 ; Vol. 59, No. 3. pp. 435-459.
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