Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/150093 
Year of Publication: 
2007
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 2 [Issue:] 2 [Publisher:] The Econometric Society [Place:] New York, NY [Year:] 2007 [Pages:] 115-133
Publisher: 
The Econometric Society, New York, NY
Abstract: 
We provide a geometric test of whether a general equilibrium incomplete markets (GEI) economy has Hart points---points at which the rank of the securities payoff matrix drops. Condition (H) says that, at each nonterminal node, there is an affine set (of appropriate dimension) that intersects all of a well-specified set of convex polyhedra. If the economy has Hart points, then Condition (H) is satisfied; consequently, if condition (H) fails, the economy has no Hart points. The shapes of the convex polyhedra are determined by the number of physical goods and the dividends of the securities, but are independent of the endowments and preferences of the agents. Condition (H) fails, and thus there are no Hart points, in interesting classes of economies with only short-lived securities, including economies obtained by discretizing an economy with a continuum of states and sufficiently diverse payoffs.
Subjects: 
Incomplete Markets
GEI model
Hart points
JEL: 
D52
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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