Monetary equilibria and Knightian uncertainty

Eisei Ohtaki and Hiroyuki Ozaki ()

Economic Theory, 2015, vol. 59, issue 3, 435-459

Abstract: This article considers a pure-endowment stationary stochastic overlapping generations economy, in which agents have maxmin expected utility preferences. Two main results are obtained. First, we show that multiple stationary monetary equilibria exist. Consequently, real and price indeterminacies arise under the assumption that aggregate shock exists. Second, we show that each of these stationary monetary equilibria is conditionally Pareto optimal, i.e., no other stationary allocations strictly Pareto dominate the equilibrium allocations. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Money; Maxmin expected utility; Conditional Pareto optimality; Indeterminacy; Stochastic overlapping generations model; E40; D81; D50; D61 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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Working Paper: Monetary Equilibria and Knightian Uncertainty (2013)
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DOI: 10.1007/s00199-015-0887-6

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