Existence and structure of stochastic equilibria with intertemporal substitution

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Existence and structure of stochastic equilibria with intertemporal substitution

We prove existence of an Arrow–Debreu equilibrium when agents’ preferences exhibit local substitution in the sense of Hindy, Huang, and Kreps (1992). Efficient allocations and supporting price functionals are identified and characterized. Under Hindy–Huang–Kreps preferences, equilibrium price processes are semimartingales for arbitrary endowments, but in general, they do not belong to the space...

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ژورنال

عنوان ژورنال: Finance and Stochastics

سال: 2001

ISSN: 0949-2984

DOI: 10.1007/s007800100048