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Sunspot Equilibria and the Transfer Paradox

Author

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  • Hens, Thorsten

    (Institute for Empirical Research in Economics, University of Zurich)

  • Pilgrim, Beate

    (Reuters AG, Frankfurt, Germany)

Abstract

We show that for international economies with two countries, in which agents have additively separable utility functions, the existence of sunspot equilibria is equivalent to the occurrence of the transfer paradox. This equivalence enables us to provide some new insights on the relation of the existence of sunspot equilibria and the multiplicity of spot market equilibria.

Suggested Citation

  • Hens, Thorsten & Pilgrim, Beate, 2004. "Sunspot Equilibria and the Transfer Paradox," Discussion Papers 2004/14, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2004_014
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    File URL: http://hdl.handle.net/11250/163694
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    References listed on IDEAS

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    1. Forges, Francoise & Peck, James, 1995. "Correlated Equilibrium and Sunspot Equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 33-50, January.
    2. Hens, Thorsten & Mayer, Janós & Pilgrim, Beate, 2004. "Existence of Sunspot Equilibria and Uniqueness of Spot Market Equilibria: The Case of Intrinsically Complete Markets," Discussion Papers 2004/15, Norwegian School of Economics, Department of Business and Management Science.
    3. Hens, Thorsten & Laitenberger, Jorg & Loffler, Andreas, 2002. "Two remarks on the uniqueness of equilibria in the CAPM," Journal of Mathematical Economics, Elsevier, vol. 37(2), pages 123-132, April.
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    7. Kehoe, Timothy J., 1991. "Computation and multiplicity of equilibria," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 38, pages 2049-2144, Elsevier.
    8. O. Galor & H. M. Polemarchakis, 1987. "Intertemporal Equilibrium and the Transfer Paradox," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 147-156.
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    16. Thorsten Hens, 2000. "Do Sunspots Matter when Spot Market Equilibria Are Unique?," Econometrica, Econometric Society, vol. 68(2), pages 435-441, March.
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    19. Thorsten Hens & Beate Pilgrim & Janos Mayer, "undated". "Existence of Sunspot Equilibria and Uniqueness of Spot Market Equilibria: The Case of Intrinsically Complete Markets," IEW - Working Papers 188, Institute for Empirical Research in Economics - University of Zurich.
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    Cited by:

    1. Takeshi Momi, 2008. "Note on the non-existence of sunspot equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 36(3), pages 503-513, September.
    2. Hoelle, Matthew, 2014. "The relation between sunspot effects and multiplicity in incomplete markets models with numeraire assets," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 119-127.

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    More about this item

    Keywords

    Sunspot Equilibria; Transfer Paradox;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F30 - International Economics - - International Finance - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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