Temporary financial equilibrium
نویسنده
چکیده
In a two-period pure exchange economy with financial assets, a temporary financial equilibrium is an equilibrium of the current spot and security markets given forecasts of future prices and returns. The temporary equilibrium model can then be interpreted as a Walrasian model where preferences depend on prices. This idenfication implies, among other consequences, the generic determinateness of the equilibrium solution. It also highlights the mechanism through which forecasts of future prices parameterize current market prices of goods and assets. JEL Classification numbers: D51, D52, D84, G12.
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