ANYTHING GOES THEOREM, INCOMPLETE MARKETS AND RICARDIAN EQUIVALENCE HYPOTHESIS

Authors

  • Dushko Josheski UGD FTBL

Abstract

In this paper, Anything Goes: The Sonnenschein-Mantel-Debreu theorem (following the work of Sonnenchein (1972, 1973), Mantel (1974), and Debreu (1974)), has been applied to incomplete markets, Bottazzi, J.-M. and T. Hens (1996), in order to test the Ricardian equivalence hypothesis. In the naïve economic environment where public debt has a perfect substitute in lump-sum taxes the RET fails if one allows payoff matrix of economic agents to vary. If the law of one price does not apply (if any two portfolios have equal payoffs than their prices should be equal too) and that the payoffs are risk free.
Keywords: Anything Goes, RET hypothesis, incomplete markets, and equilibrium.

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Published

21.02.2018

Issue

Vol. 1 (2017): 1st International Scientific Conference "Challenges of Tourism and Business Logistics in the 21st Century"

Section

Economics and business

License

The intellectual property and copyright of the original content in all scientific contributions within the published paper shall remain with the authors. The authors grant ISCTBL permission to publish the paper. All authors agree to publish the paper under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0). 

How to Cite

ANYTHING GOES THEOREM, INCOMPLETE MARKETS AND RICARDIAN EQUIVALENCE HYPOTHESIS. (2018). Challenges of Tourism and Business Logistics in the 21st Century, 1(1), 265-278. https://js.ugd.edu.mk/index.php/YFNTS/article/view/2210