Portfolio choice, exchange rates, and indeterminacy (Q1110429)

Consider an exchange economy under uncertainty. The asset market is incomplete: there are fewer assets, A, than states of nature, S. Assets are nominal and are denominated in N distinct ``currencies''. Competitive equilibria are distinct if the associated allocations are distinct. An economy displays K degrees of indeterminacy if the set of distinct competitive equilibria contains a K-dimensional open set. Generically, the economy displays NS-A(N-1)-N degrees of indeterminacy.