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| Eisei Ohtaki |
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| ''Sunspots, whether they are risk or uncertainty, cannot matter in the static Arrow-Debreu economy'' |
| ( 2010, Vol. 30 No.2 ) |
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| It is well-known that in the static Arrow-Debreu economy with complete markets, extrinsic uncertainty cannot matter. This paper re-examines this result when agents preferences exhibit aversion to Knightian uncertainty. We then show that extrinsic uncertainty still cannot matter. |
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| Keywords: Extrinsic uncertainty, Knightian uncertainty, Arrow-Debreu economy, Rational expectations equilibrium. |
JEL: D5 - General Equilibrium and Disequilibrium: General
E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data) |
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| Manuscript Received : Dec 26 2009 | | Manuscript Accepted : Apr 01 2010 |
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