Comment

  • John Geanakoplos
Part of the International Economic Association Series book series (IEA)

Abstract

The rapidly growing field called ‘general equilibrium with incomplete markets’ (GEI) has already made fundamental contributions in three different areas of economic theory. First, it has thrown up math ematical problems so delicate that they have forced economists for the first time to abandon that old war-horse—Brouwer’s fixed point theorem—and to invent (or borrow from mathematics) a new methodology for constructing existence proofs for general equilib rium. Second, it has demonstrated a significant difference between real and financial assets. Third, it has, to my mind, greatly increased the presumption against Pareto efficiency of the market process. The model appears to be flexible and rich enough to include many of the fundamental paradigms of finance and macroeconomics.

Keywords

General Equilibrium Financial Asset Incomplete Market Pareto Efficiency Perfect Competition 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. Cass, D. (1984) ‘Competitive Equilibrium with Incomplete Financial Mar kets,’ CARESS Working Paper no 85-16, University of Pennsylvania.Google Scholar
  2. Cass, D. (1985) ‘On the “Number” of Equilibrium Allocations with Incom plete Financial Markets,’ CARESS Working Paper no 85-16, University of Pennsylvania.Google Scholar
  3. Clower, R. W. (1967) ‘A Reconsideration of the Microfoundations of Monetary Theory,’ Western Economic Journal, vol. 6, pp. 1–8.Google Scholar
  4. Dubey, P., Geanakoplos, J. and Shubik, M. (1989) ‘Default and Efficiency in a General Equilibrium Model with Incomplete Markets,’ CFDP no 879R.Google Scholar
  5. Lucas, R. E., Jr (1980) ‘Equilibrium in a Pure Currency Economy,’ in J. H. Karaken and N. Wallace (eds) Models of Monetary Economies (Minneapolis, MN: Federal Reserve Bank of Minneapolis).Google Scholar
  6. Svensson, L. E. (1985) ‘Money and Asset Prices in a Cash-in-Advance Economy,’ Journal of Political Economy, vol. 93, pp. 919–44.CrossRefGoogle Scholar

Copyright information

© International Economic Association 1991

Authors and Affiliations

  • John Geanakoplos
    • 1
  1. 1.Yale UniversityUSA

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