The welfare cost of excess volatility in incomplete markets with sunspots
In an incomplete markets economy with sunspots, the Pareto-criterion cannot rank sunspot equilibria of different levels of excess price-level volatility. Therefore, I propose a measure of excess volatility cost in terms of a period-0 endowment good. Ex-ante endowment subsidies are provided, in theor...
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| Format: | Journal Article |
| Language: | English |
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2021
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| Online Access: | https://hdl.handle.net/10356/151357 |