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Behavioral Heterogeneity in Large Economies Author info | Abstract | Publisher info | Download info | Related research | Statistics Gael Giraud
Isabelle Maret
Grandmont\'s ([14]) notion of behavioral heterogeneity is reformulated in a non parametric set-up such that the space of budget share functions admits a ``uniform\'\' probability distribution. If the population is distributed according to this measure, the aggregate budget share function is constant with respect to changes in prices and income. This exact insensitivity of the market budget share function is known to imply uniqueness and global stability of any competitive equilibrium. Here, it is not explained by any insensitivity property at the micro-economic level, but rather by a perfect \'balancing effect\'. Eventually, it is proved that the insensitivity property holds approximately for a finite population sufficiently close to, but distinct from, the perfectly heterogenous one.
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Paper provided by Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg in its series Working Papers of BETA with number
2001-08.
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Date of creation: 2001Date of revision:
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Keywords: Aggregation of demand ; behavioral heterogeneity ; large economy ; Law of Demand ; Insensitivity of market budget shares. ; Find related papers by JEL classification: D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis D30 - Microeconomics - - Distribution - - - General D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
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Gael Giraud & John Quah, 2002.
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