Integrated aggregation in dynamic economies

Marsiliani, Laura; Renstroem, Thomas

Abstract

The paper provides necessary and sufficient conditions for aggregation of heterogeneousindividuals in dynamic economies, when individuals differ in abilities as well as in capitalendowments, and when there are distortionary taxes. The aggregation theorems imply that thecompetitive equilibrium can be represented as if there was only one individual in theeconomy. This considerably facilitates analysis of the aggregate economy, such as stabilityanalysis, as well as of the distribution of wealth. Furthermore, the paper provides conditionsunder which a representative individual coincides with one of the individuals in the economy.

Citation

Marsiliani, L., & Renstroem, T. (2009). Integrated aggregation in dynamic economies

• Working Paper Type: Working Paper
• Publication Date: Dec 1, 2009
• Deposit Date: Dec 7, 2012
• Publicly Available Date: Dec 7, 2012
• Series Title: Durham University Business School Economics Finance Accounting Working Papers
• Keywords: Aggregation, Economic dynamics, Heterogeneity, JEL classifcation: D30 D91 E21.
• Public URL: https://durham-repository.worktribe.com/output/1699661
• Publisher URL: http://www.dur.ac.uk/business/faculty/working-papers/