Complete and incomplete financial markets in multi-good economies

A-Tier
Journal: Journal of Economic Theory
Year: 2015
Volume: 160
Issue: C
Pages: 438-462

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We investigate conditions for endogenous incompleteness and completeness in continuous-time financial markets driven by diffusion processes with multiple consumption goods and heterogeneous agents. We show that for a class of utility functions the financial market is endogenously incomplete. A sufficient condition for market completeness is that the dividend diffusion matrix in units of the numeraire good is invertible. Further, financial market completeness can depend on the choice of the numeraire good since changing the numeraire good implies a change of the risk-free asset and the asset structure.

Technical Details

RePEc Handle
repec:eee:jetheo:v:160:y:2015:i:c:p:438-462
Journal Field
Theory
Author Count
2
Added to Database
2026-01-25