Hoelle, M. (2014): The Relation between Sunspot Effects and Multiplicity in Incomplete Markets Models with Numeraire Assets, Journal of Mathematical Economics 50, 119-127.
This paper considers the necessity and sufficiency of multiple certainty equilibria for sunspot effects, and shows that neither implication is valid. This claim is made for models with incomplete markets and numeraire assets. First, I prove that a multiplicity of certainty equilibria is neither necessary nor sufficient for sunspot effects by way of two counter-examples. Second, I verify over an entire subset of economies that equilibrium with sunspot effects can never be characterized as a randomization over multiple certainty equilibria.