The Representative Agent Hypothesis: An Empirical Test
This paper empirically tests the validity of using only /mean /income as a representative variable in the aggregate consumption relation and of assuming time-invariance of the coefficients in this relation, as done in macromodels. We use a statistical distributional approach of aggregation to test these properties on the UK-Family Expenditure Survey [1974-1993]. The time-invariance assumption is rejected in most cases. A bootstrap test also suggests that in addition to mean income, the /dispersion /of income matters significantly for the commodity group /services /in several years and for /total/ /nondurable/ in some years, thus invalidating the /representative agent hypothesis/.
|Date of creation:||04 Jun 2003|
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"A bootstrap test for positive definiteness of income effect matrices,"
CORE Discussion Papers
1990053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- repec:cup:etheor:v:8:y:1992:i:2:p:276-90 is not listed on IDEAS
- Hildenbrand, Werner, 1998. "How relevant are specifications of behavioral relations on the micro-level for modelling the time path of population aggregates?," European Economic Review, Elsevier, vol. 42(3-5), pages 437-458, May.
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