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

Omar Fdo. Arias-R.

MPRA Paper from University Library of Munich, Germany

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.

Keywords: semi-algebraic; finance; spot-equilibrium; pseudo-equilibrium (search for similar items in EconPapers)
JEL-codes: D50 D51 D52 (search for similar items in EconPapers)
Date: 2014-03-09
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