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Integrated aggregation in dynamic economies.

By Laura Marsiliani and Thomas Renstroem

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

Topics: Aggregation, Economic dynamics, Heterogeneity, JEL classifcation: D30 D91 E21.
Publisher: Durham University
Year: 2009
OAI identifier: oai:dro.dur.ac.uk.OAI2:10360
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