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Aggregation by Industry in General Equilibrium Models with International Trade


  • Peter J. Lloyd


Models of trading economies have become very large in dimensions and complex in structure. This paper seeks conditions under which it is possible to aggregate the production and consumption of groups of commodities in "industries": commodity groups sharing some common characteristics and behaviour. The most extreme form of aggregation is the simultaneous aggregation of the same commodities using the same aggregator functions on both the production and consumption sides of the model. This is called "complete aggregation". If this can be done, the competitive equilibrium can be determined in two stages and the commodity dimensions of a model can be reduced drastically, perhaps to very few. In other cases it is possible to aggregate commodities only on the production or the consumption side of the model. Such aggregation will simplify the production or consumption side and allow the derivation of new results. Conditions which are sufficient for aggregation in production or ... Les modèles sur les échanges économiques sont devenus très importants tant par la taille que par la complexité de leurs structures. Ce document cherche à déterminer les conditions qui permettent d'agréger la production et la consommation de groupes de produits par "industrie", c'est à dire les groupes de produits ayant des caractéristiques et des comportements communs. La forme la plus extrême d'agrégation est l'agrégation simultanée des mêmes produits, qui utilise les mêmes fonctions agrégatives, à la fois pour la modélisation de la production et de la consommation. Ceci est appelé "agrégation complète". Si on y parvient, l'équilibre peut être atteint en deux étapes et le nombre de produits du modéle considérablement diminué, et même réduit à quelques unités. Dans d'autres cas, on ne peut agréger les produits que du coté de la production ou de la consommation. Une telle agrégation simplifierait une partie du modèle et permettrait d'obtenir de nouveaux résultats. Les conditions ...

Suggested Citation

  • Peter J. Lloyd, 1991. "Aggregation by Industry in General Equilibrium Models with International Trade," OECD Development Centre Working Papers 50, OECD Publishing.
  • Handle: RePEc:oec:devaaa:50-en

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    References listed on IDEAS

    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. Jeffrey D. Sachs, 1989. "Developing Country Debt and Economic Performance. The International Financial System," NBER Chapters,in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages -12 National Bureau of Economic Research, Inc.
    3. Jeffrey D. Sachs, 1989. "Developing Country Debt and the World Economy," NBER Books, National Bureau of Economic Research, Inc, number sach89-3, January.
    4. Philippe Callier, 1989. "Debt Relief and Adjustment Incentives in a Financially Open Economy: Comment on Corden," IMF Staff Papers, Palgrave Macmillan, vol. 36(2), pages 514-522, June.
    5. W. Max Corden, 1988. "Debt Relief and Adjustment Incentives," IMF Staff Papers, Palgrave Macmillan, vol. 35(4), pages 628-643, December.
    6. Alain Ize & Guillermo Ortiz, 1987. "Fiscal Rigidities, Public Debt, and Capital Flight," IMF Staff Papers, Palgrave Macmillan, vol. 34(2), pages 311-332, June.
    7. Jeffrey D. Sachs, 1989. "Introduction to "Developing Country Debt and the World Economy"," NBER Chapters,in: Developing Country Debt and the World Economy, pages 1-34 National Bureau of Economic Research, Inc.
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