Do Sunspots Matter ?

  title={Do Sunspots Matter ?},
  author={David Cass and Karl Shell},
Can extrinsic uncertainty (aniniral spirits," markett psychology," " sunspots,". . .) play a signihicant role in rational expectations e(JIilibrium models? We establish that extrinsic unce tainty cannot niatter in the static Arrow-Debreu economy with complete markets. Bt we also establish that extrinsic uncertainty can matter in the overlapping-generations economy with complete i markets but where nanrket participation is limited to those consumers alive when the nvurkets are open. Equilibrium… CONTINUE READING
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