Equilibrium Indeterminacy in a Model of Constrained Financial Markets
نویسنده
چکیده
We present a General Equilibrium model with incomplete markets in which assets pay in units of a single good. In our model, agents are constrained to negotiate the same amount of assets at different states of the world. Differently from the standard result of economies with real assets, our model shows the existence of real indeterminacy. The presence of multiple equilibria raises issues related to choices of a desired equilibrium outcome. JEL Classification: D51, D52.
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