A ‘sequence economy’ is a general equilibrium model including markets at a sequence of dates, reopening over time. It is alternative to the Arrow–Debreu model with a full set of futures markets where all exchanges for current and future goods are transacted without transaction cost at a single market date. Sequence economy markets reopen and may be incomplete (some markets, particularly futures, may be inactive) because of transaction costs. The model can provide a microeconomic general equilibrium foundation for the store-of-value function of money, since markets reopening over time create an incentive to carry money and debt intertemporally.
KeywordsArrow–Debreu model Budget constraint Fiat money Futures markets General equilibrium Incomplete markets Infinite horizons Intertemporal transfers Overlapping generations models Sequence economies Sspot markets Store-of-value function of money Sunspot equilibrium Temporary equilibrium Transaction costs
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