logo
CanyamAI summaries for academic research
language
MobileMobile
  • Phone FeatureWeChat Mini Program
EnglishEnglish
noticeNotice
BlogBlog
delete
arrow
Return

Does market incompleteness matter?

delete2002-09-01
delete43
delete
OA
AI
D
David K. Levine *
W
William R. Zame
DOI：10.1111/1468-0262.00354delete
deleteOriginal
deleteShare
deleteSave
View PDF
Abstract

Abstract

En 中文
This paper argues that incompleteness of intertemporal financial markets has little effect (on welfare, prices, or consumption) in an economy with a single consumption good, provided that traders are long-lived and patient, a riskless bond is traded, shocks are transitory, and there is no aggregate risk. In an economy with aggregate risk, a similar conclusion holds, provided traders share the same CRRA utility function and the right assets are traded. Examples demonstrate that these conclusions need not hold if the wrong assets are traded or if the economy has multiple consumption goods.
Keywords:
infinite horizon economies
incomplete markets
law of large numbers
consumption smoothing
permanent income hypothesis
AI Summary

AI Summary

Key information extracted from the uploaded paper, including a brief overview, abstract, background, key highlights, visual analysis, and future outlook.

Journal

Econometrica cover
Econometrica
IF:
7.1
Papers:
3.0K
Citations:
4.3W

Organization

No organization information available