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A representative consumer theory of distribution

Caselli, Francesco and Ventura, Jaume (2000) A representative consumer theory of distribution. American Economic Review, 90 (4). pp. 909-926. ISSN 0002-8282

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Identification Number: 10.1257/aer.90.4.909

Abstract

This paper introduces various sources of consumer heterogeneity in one-sector representative consumer (RC) growth models and develops tools to study the evolution of the distribution of consumptions, assets, and incomes. These tools are applied to the Ramsey-Cass-Koopmans model of optimal savings and the Arrow-Romer model of productive spillovers. The RC property per se places very few restrictions on the nature of observed distributions, and a wide range of distributive dynamics and income mobility patterns can arise as the equilibrium outcome. An example illustrates how to use these tools to generate quantitative predictions and compare them to the data.

Item Type: Article
Official URL: http://www.aeaweb.org/aer
Additional Information: © 2000 American Economic Association
Subjects: H Social Sciences > HB Economic Theory
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Date Deposited: 27 Mar 2008 16:45
Last Modified: 24 Apr 2012 08:26
URI: http://eprints.lse.ac.uk/id/eprint/3916

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