SEQUENTIAL REGULARITY IN SMOOTH PRODUCTION ECONOMIES

In general equilibrium models where agents trade sequentially in multi ple periods, the equilibria that endogenously occur in later periods c an be robustly indeterminate if production sets are not everywhere dif ferentiable (as, for example, with linear activities). The present pap er proves that if technology is smooth, then equilibria are sequential ly regular. That is, the equilibria of the endogenously generated econ omies occurring in later periods that confirm the unanimous expectatio ns formed by agents in earlier periods are regular (and thus, for exam ple, isolated from other equilibria). The paper also proves and utiliz es the standard result that the overall intertemporal equilibria are r egular. (C) 1997 Elsevier Science B.V.