Equilibrium in abstract economies without ordered preferences

We extend a theorem of G. Debreu on the existence of equilibrium in a generalized N-person game (‘A Social Equilibrium Existence Theorem’). Applying standard techniques the result can be used to prove the existence of equilibrium in economies with interdependent preferences, price-dependent preferences and preferences which may be both non-transitive and non-complete. This generalizes a recent theorem of A. Mas-Colell.     

Equilibrium in abstract economies without ordered preferences and with a measure space of agents

We report a generalization of Aumann's (1966) existence theorem to economies without ordered preferences and with externalities in consumption. Our work can alternatively be viewed as a generalization of the Shafer–Sonnenschein (1975) theorem to economies with a continuum of agents.     

Equilibrium in economies without ordered preferences or free disposal

Recent work in competitive equilibrium analysis, pioneered by Mas-Colell (1974), ‘An equil- brium existence theorem without complete or transitive preferences’, has established existence of equilibrium in an economy in which preferences are not orderings. The purpose of this note is to show that the assumption of free disposal is not necessary for existence.     

Equilibria in Banach lattices without ordered preferences

This paper establishes a very general result on the existence of competitive equilibria for exchange economies (with a finite number of agents) with an infinite-dimensional commodity space. The commodity spaces treated are Banach lattices, but no interiority assumptions on the positive cone are made; thus, the commodity spaces covered by this result include most of the spaces considered in economic analysis. Moreover, this result applies to preferences which may not be monotone, complete, or transitive; preferences may even be interdependent. Since preferences need not be monotone, the result allows for non-positive prices, and an exact equilibrium is obtained, rather than a free-disposal equilibrium.     

Equilibria in vector lattices without ordered preferences or uniform properness

This paper extends a result by Mas-Colell and Richard (Journal of Economic Theory, 1991, 53, 1–11) on the existence of an equilibrium for exchange economies over a vector lattice to cover non-ordered preferences. Moreover, it is shown that the uniformity requirement in the properness assumption made by these authors can be weakened. Furthermore, it is shown that, as a consequence of properness, an equilibrium allocation which is supported by a discontinuous prices can also be supported by continuous prices.     

A remark on the existence of equilibria in markets without ordered preferences and with a Riesz space of commodities

We show the existence of competitive equilibria in economies without ordered preferences and a Hausdorff locally convex solid Riesz space of commodities. Our principal assumptions are that the commodity space has a predual and that its positive cone has a non-empty interior.     

Existence of equilibria in atomless production economies with price dependent preferences

The existence of a competitive equilibrium for an economy with a measure space of agents is proved by reducing the economy to a three-person game and then applying Debreu's lemma (1952). In addition to the relative simplicity and shortness of the proof, we generalize known results [Aumann (1966), Hildenbrand (1970), Schmeidler (1969)] by allowing both price dependent preferences and satiation.     

Rank-dependent preferences without ranking axioms

A key feature of the rank-dependent model for decision making under risk is that the weighting of an outcome depends on its relative rank. This theory received numerous axiomatizations, however, all these sets of axioms need to make an explicit reference to the ranking of the outcomes. This situation is unsatisfactory, as it seems to be desirable to get the ranking property of this model as a consequence of the model, rather than as an assumption. [Yaari, M.E., 1987. The dual theory of choice under risk. Econometrica 55, 95–115] offered a special version of this model (called dual theory), where the utility function is linear. This paper offers a set of axioms implying Yaari’s dual theory without making any reference to the order of the outcomes. The main axiom is called semi betweenness, which, unlike the usual case, is made on random variables rather than on distribution functions.     

Equilibria in large economies with a separable Banach commodity space and non-ordered preferences

The purpose of this paper is to provide an existence result of equilibria for economies with a measure space of agents, a non-trivial production sector and an infinite dimensional commodity space. The commodity space is modeled by an ordered separable Banach space whose positive cone has a non-empty interior. The discretization approach proposed in this paper, allows us to extend the existence results in Khan and Yannelis [Equilibrium in markets with a continuum of agents and commodities. In: Khan, M.A., Yannelis, N.C. (Eds.), Equilibrium Theory in Infinite Dimensional Spaces. Springer, Berlin, 1991] and Podczeck [Economic Theory 9 (1997) 585] to economies with a non-trivial production sector and with possibly non-ordered but convex preferences as well as partially ordered (possibly incomplete) but non-convex preferences.     

Efficiency and truthfulness with Leontief preferences. A note on two-agent,two-good economies

In exchange economies where agents have private information about their preferences, strategy-proof and individually rational social choice functions are in general not efficient. We provide a restricted domain, namely the set of preferences representable by Leontief utility functions, where there exist mechanisms which are strategy-proof, efficient and individually rational. In two-agent, two-good economies we are able to provide an even stronger result. We characterize the class of efficient and individually rational social choice functions, which are fully implementable in truthful strategies.Received: 28 April 2003, Accepted: 23 June 2003, JEL Classification: D51, D71The author thanks Matthew Jackson, Jordi Massó and James Schummer for fruitful discussions, William Thomson for many valuable comments on an earlier version. A particular thank to Salvador Barberá for his fundamental help.     

Multiple equilibria in two-sector monetary economies: An interplay between preferences and the timing for money

In this paper, we study the occurrence of local indeterminacy in two-sector monetary economies. We consider a general MIUF model with two alternative timings in monetary payments: the Cash-In-Advance timing, in which the cash available to buy goods is money in the consumers’ hands after they leave the bond market but before they enter the goods market, and the Cash-After-the-Market timing, in which agents hold money for transactions after leaving the goods market. We consider three standard specifications of preferences: the additively separable formulation, the Greenwood–Hercovitz–Huffman (GHH) (Greenwood et al., 1988) formulation and the King–Plosser–Rebelo (KPR) (King et al., 1988) formulation. First, we show that for all the three types of preferences, local indeterminacy occurs under the CIA timing with a low enough interest rate elasticity of money demand. Second, we show that with the CAM timing, although determinacy always holds under separable preferences, local indeterminacy can occur with GHH and KPR preferences. We thus prove that compared to aggregate models, two-sector models provide new rooms for local indeterminacy when non-separable standard preferences are considered.     

An equilibrium existence theorem without complete or transitive preferences

The Walrasian equilibrium existence theorem is reproved without the assumptions of complete of transitive preferences.     

Existence of an equilibrium for infinite horizon economies with and without complete information

This work proves the existence of an equilibrium for an infinite horizon economy where trade takes place sequentially over time. There exist two types of agents: the first correctly anticipates all future contingent endogenous variables with complete information as in Radner [Radner, R. (1972). Existence of equilibrium of plans, prices and price expectations in a sequence of markets. Econometrica, 289–303] and the second has exogenous expectations about the future environment as in Grandmont [Grandmont, J. M. (1977). Temporary general equilibrium theory. Econometrica, 535–572] and information based on the current and past aggregate variables including those which are private knowledge. Agents with exogenous expectations may have inconsistent optimal plans but have predictive beliefs in the context of Blackwell and Dubbins [Blackwell, D., Dubins, L. (1962). Merging of opinions with increasing information. The Annals of Mathematical Statistics, 882–886] with probability transition rules based on all observed variables. We provide examples of this framework applied to models of differential information and environments exhibiting results of market selection and convergence of an equilibrium. The existence result can be used to conclude that, by adding the continuity assumption on the probability transition rules, we obtain the existence of an equilibrium for some models of differential information and incomplete markets.     

There is no smoke without a fire: The effect of government interventions in less advanced economies

The lack of liquidity in the interbank market during the crisis of 2007–2011 led governments to impose different policies to rescue their countries’ banking sectors. While in advanced countries interventions in the banking sector were mostly related to a lack of liquidity and significant asymmetric information regarding counterparty risk, in many less advanced countries they had a precautionary motive. In our article, we investigate the effectiveness of policy interventions on healthy banking markets, with possible negative spill-over effects from other countries. To this extent, we use an event study methodology to test the effect of liquidity and financial sector policy announcements on interbank spread changes in six Central and Eastern European (CEE) countries over the period between 2007 and 2011. We find that standard liquidity interventions did not provide effective stabilization. In fact, our evidence suggests that the spread widened after their announcement, probably as a result of the negative signal and consequently increased risk aversion of banks. In such situations, regulators should consider policy instruments that aim to decrease uncertainty in the market.     

Export differentiation in transition economies

I investigate changes in the structure of trade of seventeen transition economies between 1996 and 2006, focusing on differences across three types of products - homogeneous goods, reference priced goods, and differentiated products. I examine shares of exports of each type of good, intensive and extensive margins, and the hazard of exporting. While there are cross-country differences in the distribution of export shares and in intensive and extensive margins, the largest differences exist in the hazard of exporting. There are significant differences in the hazard both across countries and time.     

Partial privatization in transition economies

Privatization in transition countries has often been partial, with the state retaining a non-controlling ownership share in privatized assets. This paper reviews briefly the empirical evidence and then analyzes the justifications that have been put forward for adopting partial privatization. These are related to the objectives of economic efficiency and the generation of government revenue, as well as to political motivations. The issues covered are the stock-flow problem, risk-sharing and restructuring, informational considerations, the role of market structure, bargaining, foreign investment and the irreversibility of reform. The paper ends with some suggestions for further research.