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| Author: | Pietra, T. Siconlfi, P. |
| Title: | Equilibrium in economies with financial markets: uniqueness of expectations and indeterminacy |
| Journal: | Journal of Economic Theory
1996 : OCT, VOL. 71:1, p. 183-208 |
| Index terms: | ECONOMIC THEORY FINANCIAL MARKETS EXPECTATIONS |
| Language: | eng |
| Abstract: | The authors consider two-period, pure exchange economies with uncertainty and complete or incomplete asset markets. Assets are nominal. If the number of agents and of period-zero commodities is large enough, there is a dense, residual set of economies (parametrized by utility functions) such that, for each pair of distinct financial equilibria, spot zero equilibrium prices are different. Agents, observing first-period equilibrium prices, can formulate exact forecasts on future equilibrium prices, notwithstanding the real indeterminacy of the set of financial equilibria. |
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