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Empirical Economics
Article . 2000 . Peer-reviewed
License: Springer TDM
Data sources: Crossref
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Aggregation in models with quantity constraints: The CES aggregation function

Authors: Horst Entorf; Henri R. Sneessens;

Aggregation in models with quantity constraints: The CES aggregation function

Abstract

This paper is devoted to the problem of aggregation in models with quantity constraints. The focus is on quantity rationing macroeconomic (QRM) models where the micromarket outcome can be written as the minimum of several variables and where the diversity of situations across micromarkets is explicitly recognized. The aggregation result given in this paper generalizes that of Lambert (1988) to employment functions with more than two components, and leads to approximate aggregate functions of the CES variety. The approximation used can accomodate general variance-covariance structures. Simulation experiments show that the approximation error remains within reasonable bounds (1-4%). It thus seems that the CES formulation can accomodate a large variety of situations. It remains in particular valid when the (restrictive) conditions required to obtain the CES function as an exact result (independently identically distributed Weibull variables) are not satisfied.

Country
Luxembourg
Keywords

Business & economic sciences, Macroeconomics, Macroéconomie & économie monétaire, Macroeconomics; smoothing-by-aggregation; mismatch; approximation, Macroeconomics, smoothing-by-aggregation, mismatch, approximation, smoothing-by-aggregation, Macroeconomics & monetary economics, mismatch, approximation, Sciences économiques & de gestion, jel: jel:E10, jel: jel:J60

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
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Average
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bronze