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Eisei Ohtaki
''Sunspots, whether they are risk or uncertainty, cannot matter in the static Arrow-Debreu economy''
( 2010, Vol. 30 No.2 )
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.
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)
Manuscript Received : Dec 26 2009 Manuscript Accepted : Apr 01 2010

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