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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Aggregation; economic dynamics; heterogeneity;
Find related papers by JEL classification:
- D30 - Microeconomics - - Distribution - - - General
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
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