Real indeterminacy of equilibria in a sunspot economy with inside money

Shin'ichi Suda, Jean Marc Tallon, Antonio Villanacci

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

In a two-period sunspot economy with inside money and S possible realizations of the sunspot, we prove that, genetically in the space of utility functions, there are S - 1 degrees of real indeterminacy. This result generalizes the previously known result for sunspot models that, generically in endowments, there is at least one degree of real indeterminacy. The proof involves showing that generically the equilibrium allocation is different across states for some household. This property allows us to perturb the utility function in a simple way and to apply standard transversality arguments to prove our main theorem.

Original languageEnglish
Pages (from-to)309-319
Number of pages11
JournalEconomic Theory
Volume2
Issue number3
DOIs
Publication statusPublished - 1992 Sep

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Sunspots
Real indeterminacy
Indeterminacy of equilibrium
Inside money
Utility function
Endowments
Household
Transversality

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Real indeterminacy of equilibria in a sunspot economy with inside money. / Suda, Shin'ichi; Tallon, Jean Marc; Villanacci, Antonio.

In: Economic Theory, Vol. 2, No. 3, 09.1992, p. 309-319.

Research output: Contribution to journalArticle

Suda, Shin'ichi ; Tallon, Jean Marc ; Villanacci, Antonio. / Real indeterminacy of equilibria in a sunspot economy with inside money. In: Economic Theory. 1992 ; Vol. 2, No. 3. pp. 309-319.
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