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Intertemporal effiiency does not imply a common price forecast

Shurojit Chatterji, Atsushi Kajii and Huaxia Zeng
Additional contact information
Shurojit Chatterji: Singapore Management University
Huaxia Zeng: Shanghai University of Finance and Economics

No 999, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: Do price forecasts of rational economic agents need to coincide in perfectly com- petitive complete markets? To address this question, we define an efficient tempo- rary equilibrium (ETE) within the framework of a two period economy. Although an ETE allocation is intertemporally efficient and is obtained by perfect competition, it can arise without the agents forecasts being coordinated on a perfect foresight price. We show that there is a one dimensional set of such Pareto efficient allocations for generic endowments.

JEL-codes: D51 D53 D61 (search for similar items in EconPapers)
Pages: 22pages
Date: 2018-08
New Economics Papers: this item is included in nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:999

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