Monetary equilibria over an infinite horizon (Q1780155)

In the paper, the modified canonical Walrasian model is studied. Modification is done by introducing money balances facilitating transactions. In the model the economy extends over an infinite horizon under uncertainty. There is a number of recent works proposing different approaches in similar situations. In the present paper, the equilibrium consisting of prices, state prices, a collection of plans for individuals and a public plan is studied. Assumptions concerning preferences and endowments are formulated. Some restrictions relate to nominal rates of interest, transfers and initial public liability. It is supposed that the individual demands securities and balances satisfy an appropriate budget constraint. Under these assumptions it is proved that an equilibrium is finite. The criterion of attainability of a consumption plan at an equilibrium is derived. It is shown that, for a fixed path of rates of interest, there exist a non-trivial multiplicity of equilibrium paths of prices of commodities, i.e., indeterminacy appears in the model.