Rationing and Sunspot Equilibria
Abstract This paper studies the effect of different rationing or income supplement schemes on equilibrium outcomes. Specifically, the question is whether the rationing schemes are successful in neutralizing extrinsic uncertainty, i.e., are stable against sunspots. Under direct, quantity rationing the equilibria are not affected by sunspots. Under value rationing, where the value spent on a group of commodities is restricted through the use of coupons, the equilibria can be affected by self-fulfilling beliefs. An example is given which calculates the entire set of equilibria showing that multiple certainty equilibria is not a necessary condition for the nontrivial effect of sunspots. Journal of Economic Literature Classification Numbers: D50, D84, E61.