aggregation (theory)

Werner Hildenbrand
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

The aim of aggregation theory is to link the micro and macroeconomic notions of aggregate demand. One would like such a link to exist for any heterogeneous population, for a large set of all conceivable income assignments, and for a small number of statistics of the income distribution. This cannot be achieved. What can be achieved is critically discussed in Section 2. In Section 3, another important topic of aggregation theory is considered: how does mean demand react to price changes? As an example, the ‘law of demand’ is discussed.
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How to cite this article

Hildenbrand, Werner. "aggregation (theory)." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 23 November 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_A000247> doi:10.1057/9780230226203.0020

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