Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/158555
Authors: 
Cherchye, Laurens
Crawford, Ian
De Rock, Bram
Vermeulen, Frederic
Year of Publication: 
2016
Citation: 
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Volume:] 7 [Year:] 2016 [Issue:] 2 [Pages:] 203-220
Abstract: 
In the tradition of Afriat (Int Econ Rev 8:67-77, 1967), Diewert (Rev Econ Stud 40:419-425, 1973) and Varian (Econometrica 50:945-972, 1982), we provide a revealed preference characterisation of exact linear aggregation. This guarantees that aggregate demand can be written as a function of prices and aggregate income alone, while abstracting from income-distributional aspects. We also establish nonparametric conditions for individual consumption to be representable in terms of Gorman Polar Form preferences. Our results are simple and complement those of Gorman (1953, 1961). We illustrate the practical usefulness of our results by means of an empirical application to a Spanish balanced microdata panel. We find strong evidence against the existence of a limited set of representative agents, which in turn seems to empirically support the need for (macroeconomic) models using a continuum of heterogeneous agents.
Subjects: 
Aggregation
Revealed preference
Gorman Polar Form preferences
Representative agent
JEL: 
C14
D11
D12
E21
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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