Sunspots, whether they are risk or uncertainty, cannot matter in the static Arrow-Debreu economy

It is well-known that in the static Arrow-Debreu economy with complete markets, extrinsic uncertainty cannot matter. This paper re-examines this result when agents preferences exhibit aversion to Knightian uncertainty. We then show that extrinsic uncertainty still cannot matter.

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Year of publication:	2010
Authors:	Ohtaki, Eisei
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 30.2010, 2, p. 961-966
Publisher:	AccessEcon
Subject:	Extrinsic uncertainty \| Knightian uncertainty \| Arrow-Debreu economy \| Rational expectations equilibrium

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Classification:	D5 - General Equilibrium and Disequilibrium ; E2 - Consumption, Saving, Production, Employment, and Investment
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008503155