Ghosal, S. (2006) Intertemporal coordination in two-period markets. Journal of Mathematical Economics, 43(1), pp. 11-35. (doi: 10.1016/j.jmateco.2006.07.003)
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Abstract
This paper studies the stability of the intertemporal coordination dynamics when the common knowledge of individual expectations of future prices is perturbed in a neighborhood of a perfect foresight equilibrium. The main forces that affect stability are: (i) the effect of a change in asset demand on second period spot market prices, and (ii) the effect on asset demand of a small change in second period prices. In an intertemporal market game whose interior Markov perfect equilibria correspond to perfect foresight equilibria, it is shown that though M-rationalizability implies the stability of the intertemporal dynamics, the converse is not always true.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Ghosal, Professor Sayantan |
| Authors: | Ghosal, S. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | Journal of Mathematical Economics |
| ISSN: | 0304-4068 |
| ISSN (Online): | 1873-1538 |
| Published Online: | 08 September 2006 |
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