Integrated Aggregation in Dynamic Economies
AbstractThe paper provides necessary and sufficient conditions for aggregation of heterogeneous individuals in dynamic economies, when individuals differ in abilities as well as in capital endowments, and when there are distortionary taxes. The aggregation theorems imply that the competitive equilibrium can be represented as if there was only one individual in the economy. This considerably facilitates analysis of the aggregate economy, such as stability analysis, as well as of the distribution of wealth. Furthermore, the paper provides conditions under which a representative individual coincides with one of the individuals in the economy.
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Bibliographic InfoPaper provided by Durham University Business School in its series Working Papers with number 2009_04.
Date of creation: 01 Dec 2009
Date of revision:
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Postal: Durham University Business School, Mill Hill Lane, Durham DH1 3LB, England
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Aggregation; economic dynamics; heterogeneity;
Find related papers by JEL classification:
- D30 - Microeconomics - - Distribution - - - General
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
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- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- Chatterjee, Satyajit, 1994. "Transitional dynamics and the distribution of wealth in a neoclassical growth model," Journal of Public Economics, Elsevier, vol. 54(1), pages 97-119, May.
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
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