Construction of an Aggregated Economy - Aggregated TFP and Price Level -

Junko Doi, Takao Fujii, Shinya Horie, Jun Iritani, Sumie Sato and Masaya Yasuoka
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Junko Doi: Kansai University, Osaka University
Takao Fujii: Kobe City University of Foreign Studies, Kobe University
Shinya Horie: Onomichi City University, Kobe University
Jun Iritani: Osaka Gakuin University
Sumie Sato: Nagoya University of Economics, Kobe University

No 228, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We aggregate an economy consisting of two commodities, two factors, and two producers into an economy with one commodity, two factors and one producer. Our aggregation method has three characteristic features. One is that an aggregated TFP and price level are defined respectively by individual TFPs and prices of commodities. Another is that our aggregation method includes an aggregation of production functions that has been considered intractable. We resolve that difficulty by specifically devoting attention to equilibrium. The other is that the total values of an original and an aggregated economy are identical.

Keywords: aggregation; macro production function; price level; TFP (search for similar items in EconPapers)
JEL-codes: B41 D24 E23 O41 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2021-08
New Economics Papers: this item is included in nep-eff, nep-isf and nep-mac
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