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Construction of an Aggregated Economy - Aggregated TFP and Price Level -

Author

Listed:
  • Junko Doi

    (Kansai University, Osaka University)

  • Takao Fujii

    (Kobe City University of Foreign Studies, Kobe University)

  • Shinya Horie

    (Onomichi City University, Kobe University)

  • Jun Iritani

    (Osaka Gakuin University)

  • Sumie Sato

    (Nagoya University of Economics, Kobe University)

  • Masaya Yasuoka

    (Kwansei Gakuin University)

Abstract

We aggregate an economy consisting of two commodities, two factors, and two producers into an economy with one commodity, two factors and one producer. Our aggregation method has three characteristic features. One is that an aggregated TFP and price level are defined respectively by individual TFPs and prices of commodities. Another is that our aggregation method includes an aggregation of production functions that has been considered intractable. We resolve that difficulty by specifically devoting attention to equilibrium. The other is that the total values of an original and an aggregated economy are identical.

Suggested Citation

  • Junko Doi & Takao Fujii & Shinya Horie & Jun Iritani & Sumie Sato & Masaya Yasuoka, 2021. "Construction of an Aggregated Economy - Aggregated TFP and Price Level -," Discussion Paper Series 228, School of Economics, Kwansei Gakuin University.
    • Handle: RePEc:kgu:wpaper:228
    as

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    File URL: http://192.218.163.163/RePEc/pdf/kgdp228.pdf
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    References listed on IDEAS

    as
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    3. Charles I. Jones, 2005. "The Shape of Production Functions and the Direction of Technical Change," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 517-549.
    4. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
    5. Franklin M. Fisher, 1982. "Aggregate Production Functions Revisited: The Mobility of Capital and the Rigidity of Thought," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(4), pages 615-626.
    6. Jesus Felipe & Franklin M. Fisher, 2003. "Aggregation in Production Functions: What Applied Economists should Know," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 208-262, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    aggregation; macro production function; price level; TFP;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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