On linking microsimulation and applied GE by exact aggregation of heterogeneous discrete-choice making agents

Riccardo Magnani and Jean Mercenier ()

No 2007-06, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Our paper contributes to bridge the gap between the microsimulation’s approach and applied GE models, by making use of exact aggregation results from the discrete choice literature: heterogeneous individuals choosing (possibly continuous amounts) within a set of discrete alternatives may be aggregated into a representative agent with CES/CET preferences/technologies. These results therefore provide a natural link between the two policy evaluation approaches. We illustrate the usefulness of these results by evaluating potential effects of population ageing on the dynamics of income distribution and inequalities, using a simple OLG model when individuals have to make leisure/work decisions, and choose a profession among a discrete set of alternatives.

Keywords: Microsimulation; Applied OLG models; Exact aggregation; Discrete choice; Population ageing; Income inequality (search for similar items in EconPapers)
JEL-codes: C63 C68 C81 D31 D58 E17 J10 J22 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-dcm
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2007-06

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