Abstract
© (2016) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research AssociationI present a general equilibrium model with incomplete markets in which assets pay in units of a numéraire good. In this economy, agents are constrained to negotiate the same amount of assets in different states of the world. Different from the standard result of economies with real assets, equilibrium indeterminacy can arise, depending on the structure of the financial markets. Equilibrium fails to be unique when it is not possible to transfer wealth between states in which consumers trade a pair of assets that face the same restriction.
| Original language | English |
|---|---|
| Pages (from-to) | 857-880 |
| Number of pages | 24 |
| Journal | International Economic Review |
| Volume | 57 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 1 Aug 2016 |