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Arrow's Equivalency Theorem in a Model with Neoclassical Firms

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  • Svetlana Boyarchenko

Abstract

In this paper we consider a two-period general equilibrium model with uncertainty and real assets as financial instruments. The novelty of the analysis is that real assets are the stocks of neoclassical firms, so that both returns and yields depend on anticipated spot goods prices (and, of course, the yield matrix may change rank with prices). Assuming that financial markets are potentially complete, we establish generic existence of financial equilibrium and prove that there exists a dense set of economies such that financial equilibria are efficient. Copyright Springer-Verlag Berlin/Heidelberg 2004
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  • Svetlana Boyarchenko, 2001. "Arrow's Equivalency Theorem in a Model with Neoclassical Firms," Penn CARESS Working Papers 19898b45c40f0986f4bd94f12, Penn Economics Department.
    • Handle: RePEc:cla:penntw:19898b45c40f0986f4bd94f1258efcc2
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    File URL: http://www.econ.upenn.edu/Centers/CARESS/CARESSpdf/01-08.pdf
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    Cited by:

    1. Alberto Bisin & Gian Luca Clementi & Piero Gottardi, 2014. "Capital Structure and Hedging Demand with Incomplete Markets," NBER Working Papers 20345, National Bureau of Economic Research, Inc.
    2. Guido Ruta & Piero Gottardi, 2009. "Equilibrium corporate finance," 2009 Meeting Papers 149, Society for Economic Dynamics.
    3. Bisin, Alberto; & Gottardi, Piero; & Ruta, Guido, 2014. "Equilibrium corporate finance and intermediation," Economics Working Papers ECO2014/09, European University Institute.
    4. Zierhut, Michael, 2019. "Nonexistence of constrained efficient production plans," Journal of Mathematical Economics, Elsevier, vol. 83(C), pages 127-136.

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