The exact insensitivity of market budget shares and the "balancing effect"

Gaël Giraud and Isabelle Maret
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Isabelle Maret: BETA, Universit Louis Pasteur

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: We reformulate Grandmont's and its successors' notion of behavioral heterogeneity such as to get the exact insensitivity of the aggregate budget share function with respect to changes in prices and income, instead of a mere approximate insensitivity. We propose a non parametric set-up such that, if the population is distributed according to some "uniform" probability measure, the aggregate budget share function is constant. The important contribution is that this exact insensitivity is not explained by any insensitivity at the microeconomic level but rather by an exact "balancing effect". We give illustrative examples of populations that fulfill our requirements

Keywords: Aggregation of demand; behavioral heterogeneity; balancing effect; large economy; law of demand (search for similar items in EconPapers)
JEL-codes: D11 D12 D30 D41 D50 E1 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2007-01
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (10)

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https://shs.hal.science/halshs-00155753 (application/pdf)

Related works:
Working Paper: The Exact Insensitivity of Market Budget Shares and the "Balancing Effect" (2007)
Working Paper: The Exact Insensitivity of Market Budget Shares and the "Balancing Effect" (2007)
Working Paper: The Exact Insensitivity of Market Budget Shares and the 'Balancing Effect' (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:b07023

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