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  3. American Economic Review
  4. September 2000
  5. A Representative Consumer Theory of Distribution

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

A Representative Consumer Theory of Distribution

  • Francesco Caselli
  • Jaume Ventura
American Economic Review
vol. 90, no. 4, September 2000
(pp. 909–926)
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Abstract

This paper introduces various sources of consumer heterogeneity in one-sector representative consumer (RC) growth models and develops tools to study the evolution of the distribution of consumptions, assets, and incomes. These tools are applied to the Ramsey-Cass-Koopmans model of optimal savings and the Arrow-Romer model of productive spillovers. The RC property per se places very few restrictions on the nature of observed distributions, and a wide range of distributive dynamics and income mobility patterns can arise as the equilibrium outcome. An example illustrates how to use these tools to generate quantitative predictions and compare them to the data.

Citation

Caselli, Francesco, and Jaume Ventura. 2000. "A Representative Consumer Theory of Distribution." American Economic Review, 90 (4): 909–926. DOI: 10.1257/aer.90.4.909

JEL Classification

  • O41 One, Two, and Multisector Growth Models
  • E13 General Aggregative Models: Neoclassical