We enlarge the standard model of general equilibrium with incomplete market (GEI), to incorporate liquidity constraints as well as the possibility of bankruptcy and default. A new equilibrium results, which we abbreviate GELBI (general equilibrium with liquidity, bankruptcy and incomplete...

This paper provides an analysis of the asymptotic properties of consumption allocations in a stochastic general equilibrium model with heterogeneous consumers. In particular we investigate the market selection hypothesis, that markets favor traders with more accurate beliefs. We show that in any...

Existence of equilibrium is proved for an exchange strategic market game with complete markets. An example of equilibrium with inconsistent prices is given.

The possibility of default limits available liquidity. If the potential default draws nearer, a liquidity crisis may ensue, causing a crash in asset prices, even if the probability of default barely changes, and even if no defaults subsequently materialize. Introducing default and limited...

The paper, prepared for a Roundtable on Major Economic Problems in the U.S. and the U.S.S.R., discusses some aspects of price theory ñ in particular, the theory of general equilibrium -ñ which may offer some theoretical insights about the economic problems to be encountered during the...

Introducing default and limited collateral into general equilibrium theory (GE) allows for a theory of endogenous contracts, including endogenous margin requirements on loans. This in turn allows GE to explain liquidity and liquidity crises in equilibrium. A formal definition of liquidity is...

Irving Fisher's Ph.D. thesis, submitted to Yale University in 1891, contains a fully articulated general equilibrium model presented with the broad scope and formal mathematical clarity associated with Walras and his successors. In addition, Fisher presents a remarkable hydraulic apparatus for...

We show that there is a broad range of systems of simultaneous equations that arise in economics as descriptions of equilibrium that can be solved in elementary fashion via degree theory. Some of these systems are not susceptible to analysis by standard Brouwer fixed point methods. Two of our...