Sunspot cycles

Summary. This paper shows new properties about the equilibria of a stationary OG economy by establishing a connection between its stationary equilibria and those of a finite economy, with and without extrinsic uncertainty. Specifically, it shows the countability and local uniqueness with respect to the sup metric of the so-called sunspot cycles introduced here, that encompass both the deterministic cycles and the usual finite Markovian stationary sunspot equilibria. These sunspot cycles are, moreover, able to generate, at a lower cost in terms of assumptions than other sunspot equilibria, time series with the recurrent but irregular fluctuations typical of economic time series. Received: July 26, 2001; revised version: March 5, 2002 RID="*" ID="*" I want to thank an anonymous referee for comments that have helped greatly to improve this paper, as well as the comments about its contents received from several audiences in different seminars and conferences (the Economic Theory seminar of the University of Pennsylvania, the 2001 Meeting of the Econometric Society held at New Orleans, the 2000 Econometric Society World Congress, the 2000 Society for Economic Design Conference) and from comments to a previous paper, Dávila 10], specially from Jim Peck at the 1997 Workshop on General Equilibrium held at the University of Venice, that eventually lead to this one.