COMMENT ON: “DO SUNSPOTS MATTER WHEN SPOT MARKET EQUILIBRIA ARE UNIQUE?”

Mas-Colell (1992) conjectured that there could be no sunspot equilibria if the fun damentals of the underlying economy admitted a unique equilibrium. Hens (2000) con structed an example to show that this conjecture was false. A weak form of Mas-Colell’s conjecture is indeed false, but there is an error in Hens’s proof. The first part of this com ment shows the mistake in Hens’s argument, and the second part proves the existence of the relevant sunspot equilibria. We conclude with a discussion of why an example like Hens’s is necessary if one wishes to prove that a stricter form of Mas-Colell’s conjecture is indeed false. We follow Hens’s notation almost exactly. There are two sunspot-contingent assets paying returns denominated in units of the numeraire. These returns are 0 1 V = b