Aggregation without Separability: A Generalized Composite Commodity Theorem.

S-Tier
Journal: American Economic Review
Year: 1996
Volume: 86
Issue: 3
Pages: 524-43

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

This paper provides general conditions for aggregating commodities without separable utility. These conditions impose weaker and more empirically plausible restrictions on price movements than the currently existing alternative to separability, the Hicks-Leontief composite commodity theorem. The idea is to allow departures from Hicks-Leontief that take the form of well-behaved error terms. Utility functions that permit generalized composite commodity aggregation include the AIDS model, the translog, all homothetic utility functions, and any utility function when demands are aggregated to two groups of goods. Implications of empirical nonstationarity of relative prices for aggregation and demand estimation are considered. Copyright 1996 by American Economic Association.

Technical Details

RePEc Handle
repec:aea:aecrev:v:86:y:1996:i:3:p:524-43
Journal Field
General
Author Count
1
Added to Database
2026-01-25