Compendious and thorough solutions to the existence of a linear price equilibrium problem, the secondwelfare theorem, and the limit theoremon the core are provided for exchange economieswhose consumption sets are the positive cone of arbitrary ordered Fréchet spaces—dispensing entirely with the assumption that the vector ordering of the commodity space is a lattice. The motivation comes from ec...

The type-agent core is a new solution concept for exchange economies with asymmetric information. It coincides with the set of subgame-perfect equilibrium outcomes of a simple competitive screening game. Uninformed intermediaries help the agents to cooperate in an attempt to make some profit. The paper extends the work of Perez-Castrillo [Cooperative outcomes through non-cooperative games, Game...

I study a search economy in which intermediaries are the driving force coordinating the economy on the use of a unique, common medium of exchange for transactions. If search frictions delay trade, intermediaries offering immediate exchange opportunities can make arbitrage gains from a price spread, but they have to solve the search market’s allocation problem. Intermediaries solve this problem ...

In an exchange economy with a finite number of indivisible goods, we analyze a dynamic trading process of coalitional recontracting where agents may make mistakes with small probability. We show first that the recurrent classes of the unperturbed (mistakefree) process consist of (i) all core allocations as absorbing states, and (ii) cycles of non-core allocations. Next, we introduce a perturbed...

There are two distinct “Scandinavian consensus” approaches to public good supply, both based on agents’ willingness to pay. A Wicksell–Foley public competitive equilibrium arises from a negative consensus in which no change of public environment, together with associated taxes and subsidies which finance it, will be unanimously approved. Alternatively, in a Lindahl or valuation equilibrium, cha...

Following Shapley (1976), we study the problem of the existence of a Nash Equilibrium (NE) in which each trading post is either active or “legitimately” inactive, and we call it a Shapley NE. We consider an example of an exchange economy, borrowed from Cordella and Gabszewicz (1998), which satisfies the assumptions of Dubey and Shubik (1978), and we show that the trivial equilibrium, the unique...

Although FDI is widely believed to have a positive effect on economic growth, the exact mechanism of how FDI impacts upon the development process of the newly industrialising economies is far from being well understood. This paper presents and tests two propositions on the role of FDI in economic growth from a newly industrialising economy’s perspective. First, FDI is a mover of production effi...

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper analyzes the dynamic interactions between the prec...

We implement a dynamic asset pricing experiment in the spirit of Lucas (1978) with storable assets and non-storable cash. In one treatment we impose diminishing marginal returns to cash to incentivize consumption-smoothing across periods, while in a second treatment there is no induced motive for trade. In the former case we find that subjects use the asset to smooth consumption though the asse...