SFB 303 Discussion Paper No. A - 353
Author: Hens, Thorsten
Title: Structure of General Equilibrium Models with Incomplete Markets
and a Single Consumption Good
Abstract: The topic of this paper ist to analyze the structure of a
Finance Model from a General Equilibrium point of view. With complete
financial markets the model is formally equivalent to the contingent
markets Arrow - Debreu General Equilibrium Model. However with
incomplete markets, in general, one looses Walras Law, Boundary
Behaviour and Continuity of the Market Excess Demand Function. We
therefore impose impose assumptions which are stronger than those in
the Arrow - Debreu setting but weaker than those usually used in the
incomplete markets literature to prove Existence of equilibria. The
main point of this paper is to show that besides being generically
regular, the market excess demand function can, in general, have any
structure. Finally, we make the point that although being allocational
equivalent, the complete markets Finance Model and the contingent
markets model differ with respect to local asymptotic stability of
equilibria.
Keywords:
JEL-Classification-Number:
Creation-Date: December 1991
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