Sunspot-like equilibria in an overlapping generations economy with strategic interactions |
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Authors: | Sonia Di Giannatale |
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Affiliation: | (1) Centro de Investigación y Docencia Económicas, Carretera México-Toluca 3655, Col. Lomas de Santa Fe 01210, Mexico D.F., Mexico |
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Abstract: | In this paper I analyze the effect of market uncertainty in an overlapping generations economy with strategic interactions among agents. I demonstrate the existence of sunspot-like equilibria, in which arbitrarily small amounts of intrinsic uncertainty in agents’ offers generate large fluctuations in equilibrium bids and prices. I would like to express my gratitude to Stephen Spear for his guidance during the realization of this project. I thank an anonymous referee for providing insightful comments and suggestions. I have benefited from comments by Alexander Elbittar, Cesar Guerrero, and Vivek Ramachandran. |
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Keywords: | Sunspots Strategic interaction |
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