Reference : Preferences and the Dynamic Representative Consumer
Reports : External report
Business & economic sciences : General economics & history of economic thought
Preferences and the Dynamic Representative Consumer
Koulovatianos, Christos mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
University of Vienna
[en] This paper provides families of time-separable, twice continuously differentiable, and strictly concave utility functions of a group of consumers that are both suffcient and necessary in order to have linear aggregation in a single-commodity-type deterministic dynamic environment, in the presence of consumer wealth-, labor-productivity, and preference heterogeneity, for alternative settings where the rates of time preference can be the same or different across consumers. The employed concept of linear aggregation pertains the existence of a representative consumer with a time-separable utility function. It is proved that when the rates of time preference are choice-independent and heterogeneous across consumers, a representative consumer exists if, and only if, the momentary utility functions of all consumers are exponential. Results are also provided for, (i) common across consumers choice-independent rates of time preference, and, (ii) heterogeneous choice-dependent rates of time preference, and compared with previously identified sufficient conditions for aggregation in the existing literature.

There is no file associated with this reference.

Bookmark and Share SFX Query

All documents in ORBilu are protected by a user license.