SFB 303 Discussion Paper No. A - 354
Author: Hens, Thorsten
Title: Sunspot Equilibria in Finite Horizon Models with Incomplete Markets
Abstract: The purpose of this paper is to clarify the relationship between the
uniqueness of spot market equilibria and the existence of sunspot equilibria
in a two periods general equilibrium model with incomplete real asset markets and
no first period comsumption. It is shown by an example with Cobb-Douglas
preferences and numeraire assets that sunspot equilibria exist even though
spot market equilibria are unique for all distributions of ex post endowments
which can be reached by using ex ante asset trade. Moreover it is shown that
generically non sunspot equilibria are locally unique so that there do not
exist local sunspot equilibria.
Creation-Date: November 1991
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