Research Details

Abstract

We consider a Lucas asset-pricing model with heterogeneous agents, exogenous labor income, and a finite number of exogenous shocks. Although agents are infinitely lived, endowments and dividends are time-invariant functions of the exogenous shock alone and are thus restricted to lie in a finite-dimensional space; genericity analysis can be conducted on sets of zero Lebesgue measure. When financial markets are incomplete, that is, there are fewer financial securities than shocks, we show that generically in individual endowments all competitive equilibria are Pareto inefficient.

Type

Article

Author(s)

Felix Kubler, Karl Schmedders

Date Published

2003

Citations

Kubler, Felix, and Karl Schmedders. 2003. Generic Inefficiency of Equilibria in the General Equilibrium Model with Incomplete Asset Markets and Infinite Time. Economic Theory.(1): 1-15.