Aggregation, Persistence and Volatility in a Macro Model

@article{Abadir2002AggregationPA,
  title={Aggregation, Persistence and Volatility in a Macro Model},
  author={Karim M. Abadir and Gabriel Talmain},
  journal={ERN: Other Macroeconomics: Aggregative Models (Topic)},
  year={2002}
}
  • K. Abadir, G. Talmain
  • Published 1 October 2002
  • Economics
  • ERN: Other Macroeconomics: Aggregative Models (Topic)
Starting from microeconomic foundations, we derive a general formula for the aggregation of outputs of heterogeneous firms (or sectors), and we solve explicitly for the fundamental intertemporal equilibrium path of the aggregate economy. The firms are subject to temporary technology shocks, but the aggregate output has radically different dynamical properties, and a special form of long memory and nonlinearity never used hitherto. We study, analytically, the implied time series properties of… 
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