An interesting observation on the model of Arrow (1953) is that there is an indeterminacy of equilibrium prices of assets - every positive asset price vector can be embedded in equilibrium. This indeterminacy is, however, entirely nominal - it does not affect the allocation of commodities. A model of a sequence of markets with an arbitrary (possibly incomplete) structure of financial assets has been analyzed by Cass (1984), Werner (1985), and Duffie (1987). Such a model has an equilibrium under standard assumptions, and the same feature that every arbitrage-free asset price system can be embedded in an equilibrium. It turns out, however, that this indeterminacy of asset prices is in general real, i.e. it affects the equilibrium allocaton of commodities, when markets are incomplete.

The indeterminacy of equilibrium allocations with financial
assets has been analyzed by Geanakoplos and Mas-Colell (1985), Balasko and Cass (1986), and Werner (1986).
The present paper generalizes previous results of Werner (1986) in two aspects: in provides a description of real
indeterminacy for a two period model with an arbitrary asset structure (no assumptions on the return matrix), and
for a multiperiod model with trade of financial assets at every date. The importance of the first generalization lies
in the fact that the previously imposed restriction to return matrices in general position is restrictive from the
economic point of view.

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**Creation-Date**: July 1987

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