The structure of sunspot equilibria: The role of multiplicity

This paper examines the structure of sunspot equilibria in a standard two p eriod exchange economy with real assets. We show that for a generic choice of utility functions and endowments, there exists an open set of real asset structures whose payoffs are independent of sunspots such that the economy with this asset structure has a regular sunspot equilibrium. An important implication of our result is that the multiplicity of non-sunspot equilibri a is not necessary for the existence of sunspot equilibria. Our technique i s general and can be applied to show the existence of sunspot equilibria in other frameworks.