ISSN:
1432-0479
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Summary It is shown that in a two-period economy with a continuum of states and real assets, the following holds: (1) if the asset structure is complete, then generically the number of equilibria is finite; (2) if there are a finite number of real assets (this can approximate completeness arbitrarily close) then, for a nonempty open set of economies, there are a continuum of distinct equilibria. Asymptotic versions (on the number of states and on the number of assets) of the result are also given. It is argued, therefore, that incompleteness, by itself, may be a leading source of indeterminacy.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01210573
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