On the pseudo-equilibrium manifold in semi-algebraic economies with real financial assets

Arias-R., Omar Fdo. (2014): On the pseudo-equilibrium manifold in semi-algebraic economies with real financial assets.

Abstract

The aim of this paper is to prove that if the consumption set of an economy with incomplete financial markets is semi-algebraic, then the corresponding pseudo-equilibrium manifold is also semi-algebraic. For this, we proceed by constructing an incomplete financial economy with real assets and semi-algebraic utility functions. Then, we show that the spot-equilibrium set and the pseudo-equilibrium set are smooth semi-algebraic manifolds. We extent this results by showing that the pseudo-equilibrium natural projection is a semi-algebraic diffeomorphism in each regular point of the semi-algebraic pseudo-equilibrium manifold. It is directly related with the local determinacy of pseudo-equilibrium.

• Item Type: MPRA Paper
• Language: English
• Keywords: semi-algebraic, finance, spot-equilibrium, pseudo-equilibrium
• Subjects: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets

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