Integrated aggregation in dynamic economies

Marsiliani, Laura; Renstroem, Thomas

Integrated aggregation in dynamic economies

Marsiliani, Laura; Renstroem, Thomas

Authors

Professor Laura Marsiliani laura.marsiliani@durham.ac.uk
Professor

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.

Citation

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

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/