This introduces the symposium on sunspots and lotteries. Two stochastic general equilibrium concepts, Sunspot Equilibrium (SE) and Lottery Equilibrium (LE), are compared. It is shown that, for some general, pure-exchange economies which allow for consumption non-convexities or moral hazards, the...

We do two things in this paper. First, we put forward some elements of a microeconomic theory of technological evolution. This involves adding nascent (essentially undiscovered) technologies to the existing technologies of neoclassical production theory, and, more importantly, expanding the...

Restrictions placed on bank portfolios are analyzed in a banking model designed to capture the role of checking accounts in facilitating transactions. Forcing banks to hold only liquid assets creates the incentive for liquidity-based runs. Even when a run does not occur, welfare is reduced as a...