Money, Financial Assets and Incomplete Markets

点击翻译按钮获取中文摘要

This project continues a systematic analysis of the role of real, financial and monetary markets in a decentralized economy. The object is to analyze the intertemporal allocation of resources achieved by a system of spot markets, financial markets and a banking system and to model the activities of the government in the private sector of the economy. The long-run objective is to provide a rigorous foundation for modern macroeconomics and hence to provide a solid basis for understanding government monetary and fiscal policy. This is an exciting project because it tackles fundamental and extremely difficult problems in economic theory. General equilibrium analysis uses the classic Arrow-Debreu framework with complete contingent markets. The contribution of this project comes from developing a more general model with real and financial markets in which the structure of markets is incomplete. The degree of incompleteness is not assumed, as it has been in past work, but determined as part of the equilibrium.