Prove Proposition 17.7. In particular, show that if n ∗[K], then there exists a profitable deviation for a financial intermediary to offer securities for a previously unavailable sector and make positive profits, and that if n ∗[K], feasibility is violated. Proposition 17.7 Suppose that Q ≥ (2 − γ )q. Then given K(t), there exists a unique time t equilibrium where all sectors j ≤ n∗(t) = n∗[K(t)] are open and those j >n ∗[K(t)]are shut, where

Prove Proposition 17.7. In particular, show that if n ∗[K], then there exists a profitable deviation for a financial intermediary to offer securities for a previously unavailable sector and make positive profits, and that if n ∗[K], feasibility is violated. Proposition 17.7 Suppose that Q ≥ (2 − γ )q. Then given K(t), there exists a unique time t equilibrium where all sectors j ≤ n∗(t) = n∗[K(t)] are open and those j >n ∗[K(t)]are shut, where

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 27EQ

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