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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- repec:cup:etheor:v:8:y:1992:i:2:p:276-90 is not listed on IDEAS
- Haerdle,W. & Hart,J.D., 1989.
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Discussion Paper Serie A
199, University of Bonn, Germany.
- Härdle, Wolfgang & Hart, Jeffrey D., 1992. "A Bootstrap Test for Positive Definiteness of Income Effect Matrices," Econometric Theory, Cambridge University Press, vol. 8(02), pages 276-292, June.
- Hardle, W. & Hart, J., 1990. "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).
- HÄRDLE, Wolfgang & HART, Jeffrey D., "undated". "A bootstrap test for positive definiteness of income effect matrices," CORE Discussion Papers RP 999, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Stoker, Thomas M, 1993. "Empirical Approaches to the Problem of Aggregation Over Individuals," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1827-1874, December.
- 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.
- Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
- Attanasio, Orazio P., 1999. "Consumption," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 11, pages 741-812 Elsevier.
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