SFB 303 Discussion Paper No. A - 291
Author: Chiappori, Pierre André, and Roger Guesnerie
Title: Sunspot Equilibria in Sequential Markets Models
Abstract: Equilibrium with rational expectations is a central construct of modern economic theory. The studies that
are surveyed here are primarily aimed at assessing the properties and relevance of this construct in a general
equilibrium framework; in particular, they are related to the issue of multiplicity (and, more specifically,
"indeterminacy") of rational expectation equilibria. The present text thus belongs to the broader category of
contributions to general equilibrium with rational expectations. The viewpoint that is taken is associated with the
so-called concept of sunspot equilibrium. It leads to focus on aspects of general equilibrium with rational
expectations that have been given a central role in recent literature. In subsection A, we present the problematic
of sunspot equilibria in the broader perspective we have just stressed. Subsection B provides an overview of
issues relating to the sunspot literature. Subsection C discusses an example of sunspot equilibrium in a
framework analogous to the one that will be adopted in the next Sections.
Creation-Date: May 1990
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