THE REPRESENTATIVE CONSUMER IN THE NEOCLASSICAL GROWTH MODEL WITH IDIOSYNCRATIC SHOCKS

Lilia Maliar and Serguei Maliar

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper studies a complete-market version of the neoclassical growth model, where agents face idiosyncratic shocks to earnings. We show that if agents possess identical preferences of either the CRRA or the addilog type, then the heterogeneous-agent economy behaves as if there was a representative consumer who faces three kinds of shocks, to preferences, to technology and to labor. We calibrate and simulate the constructed representative-consumer models. We find that idiosyncratic uncertainty can have a non-negligible effect on aggregate labor-market fluctuations.

Keywords: neoclassical growth model; heterogeneous agents; aggregation (search for similar items in EconPapers)
JEL-codes: C73 D90 E21 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2002-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published by Ivie

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2002-20.pdf Fisrt version / Primera version, 2002 (application/pdf)

Related works:
Journal Article: The Representative Consumer in the Neoclassical Growth Model with Idiosyncratic Shocks (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2002-20

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