The Representative Agent Hypothesis: An Empirical Test
This paper empirically tests the validity of using only mean income as a representative variable for the whole population in the aggregate consumption relation and of assuming time-invariance of the coefficients in this relation, as done in macromodels. We use a statistical distributional approach of aggregation to test these properties on the UK-Family Expenditure Survey [1974-1993]. It is observed that the time-invariance assumption is rejected in most cases. A bootstrap test also suggests that in addition to mean income, the dispersion of income matters significantly for the commodity group services in several years and for clothing & footwear and total nondurable in some years, thus invalidating the representative agent hypothesis.
Representative Agent Hypothesis, Time Invariance, Heterogeneity
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.