Consumption Externalities : A Representative Consumer Model when Agents are Heterogeneous *

@inproceedings{GarcaPealosa2007ConsumptionE,
  title={Consumption Externalities : A Representative Consumer Model when Agents are Heterogeneous *},
  author={Cecilia Garc{\'i}a-Pe{\~n}alosa},
  year={2007}
}
  • Cecilia García-Peñalosa
  • Published 2007
We examine a growth model with consumption externalities where agents differ in their initial capital endowment and their reference group. We show under which conditions the aggregate equilibrium with heterogeneous agents replicates that obtained with a representative consumer, despite the fact that different individuals have different consumption levels. Next we consider the implications of the presence of consumption externalities for the long-run distributions of income and wealth. We find… CONTINUE READING