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Representing consumption and saving without a representative consumer

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  • Carroll, Christopher D.

Abstract

The Great Recession confirmed a bedrock principle of modern consumption theory: It is impossible to explain aggregate spending behavior without knowledge of the underlying microeconomic distribution of circumstances and choices across households. National accounting frameworks therefore need to be augmented by "bottom up" measures that both (a) capture the microeconomic heterogeneity (in expenditures, income, assets, debt, and beliefs) in the population and (b) sum up to statistics that have a recognizable relationship to the aggregate totals that are already reasonably well measured.

Suggested Citation

  • Carroll, Christopher D., 2014. "Representing consumption and saving without a representative consumer," CFS Working Paper Series 464, Center for Financial Studies (CFS).
  • Handle: RePEc:zbw:cfswop:464
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    References listed on IDEAS

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    Cited by:

    1. Bram De Rock & Bart Capéau, 2015. "The implications of household size and children for life-cycle saving," Working Paper Research 286, National Bank of Belgium.

    More about this item

    Keywords

    National Accounting; Inequality; Distribution;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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