A Characterization of Robust Sunspot Equilibria

Rodney Garratt and Todd Keister

University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: In nonconvex environments, a sunspot equilibrium can sometimes be destroyed by the introduction of new extrinsic information. We provide a simple test for determining whether or not a particular equilibrium survives, or is robust to, all possible re…nements of the state space. We use this test to provide a characterization of the set of robust sunspot-equilibrium allocations of a given economy: it is equivalent to the set of equilibrium allocations of the associated lottery economy.

Keywords: Characterization; Robust; Sunspot; Equilibria (search for similar items in EconPapers)
Date: 1999-10-07
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Journal Article: A Characterization of Robust Sunspot Equilibria (2002)
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