Sequential Indeterminacy in Production Economies
Abstract A sequential regularity concept is proposed for intertemporal general equilibrium models: in addition to the intertemporal economy, the economies that endogenously arise through time should also be regular. With linear activities, however, there are open sets of economies that are sequentially indeterminate: economies with a continuum of equilibria appear. Endowments in a measure-zero set are necessary for indeterminacy, but the passage of time allows these endowments to arise robustly. The indeterminacy is related to the degeneracy in mathematical programming that occurs when there are more binding constraints than activities in use. An analogous degeneracy condition generically characterizes sequential indeterminacy. Journal of Economic Literature Classification Numbers: D50, C61.