This paper presents a model of stock market equilibrium with a finite number of corporations and studies its normative properties. Each firm is run by a manager whose effort is unobservable and influences the probabilities of the firm's outcomes. The Board of Directors of each firm chooses an...

This paper studies the existence and uniqueness of equilibrium in a monetary model in which the fiscal policy is Ricardian. The innovation of the paper is to model agents’ expectations as endogenous probabilities which are determined in equilibrium. Since economies with a Ricardian fiscal...