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Title: Stabilizing sunspots
Authors: Goenka, A. 
Prechac, C.
Keywords: Incomplete markets
Stabilization policy
Sunspot equilibrium
Welfare analysis
Issue Date: 2006
Citation: Goenka, A., Prechac, C. (2006). Stabilizing sunspots. Journal of Mathematical Economics 42 (4-5 SPEC. ISS.) : 544-555. ScholarBank@NUS Repository.
Abstract: This paper analyzes stabilization of sunspot equilibria in an incomplete financial market framework. Indexation of nominal bonds or introduction of real securities can eliminate the sunspot equilibria. However, we show that the utility of one type of consumer may be minimized at a Walrasian allocation relative to other sunspot equilibrium allocations. Thus, if considering stabilization policies from the status quo of incomplete financial markets, there may be no consensus on implementing them.©2006 Elsevier B.V. All rights reserved.
Source Title: Journal of Mathematical Economics
ISSN: 03044068
DOI: 10.1016/j.jmateco.2006.05.003
Appears in Collections:Staff Publications

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