This paper analyzes the feasibility of sustaining uniformly positive consumption forever--even when flows of exhaustible resources are an indispensable input. The main result is a characterization of an economy's capability for sustaining such consumption--under quite general maintained...

In this paper we develop a differential technique for investigating the welfare effects of financial innovation in incomplete markets. Utilizing this technique, and after parametrizing the standard competitive, pure-exchange economy by both endowments and utility functions, we establish the...

This paper examines the effects of extrinsic uncertainty or sunspots on competitive equilibrium when financial markets are incomplete. For the canonical two-period, pure-exchange model with bonds (or so-called "nominal assets," yielding overall returns specified in units of account, and...