Abstract
Aggregation in production concerns the conditions under which macro production functions can be derived from micro production functions. Microeconomic theory elegantly treats the behaviour of optimizing individual agents in a world with an arbitrarily long list of individual commodities and prices. However, the desire to analyse the great aggregates of macroeconomics - gross national product, inflation, unemployment, and so forth - leads to theories that treat such aggregates directly. The aggregation ‘problem’ matters because without proper aggregation one cannot interpret the properties of such macroeconomic models. This is particularly true as regards the production sector.
This is a preview of subscription content, log in via an institution.
Preview
Unable to display preview. Download preview PDF.
Bibliography
Blackorby, C., Lay, G., Nissen, D. and Russell, R. 1970. Homothetic separability and consumer budgeting. Econometrica 38, 468–72.
Blackorby, C. and Schworm, W. 1984. The structure of economies with aggregate measures of capital: a complete characterization. Review of Economic Studies 51, 633–50.
Blackorby, C. and Schworm, W. 1988. The existence of input and output aggregates in aggregate production functions. Econometrica 56, 613–43.
Eastern Economic Journal. 2005. Symposium on the aggregate production function. Vol. 31(3).
Felipe, J. 2001. Endogenous growth, increasing returns, and externalities: an alternative interpretation of the evidence. Metroeconomica 52, 391–427.
Felipe, J. and Fisher, F. 2003. Aggregation in production functions: what applied economists should know. Metroeconomica 54, 208–62.
Felipe, J. and Holz, C. 2001. Why do aggregate production functions work? Fisher’s simulations, Shaikh’s identity, and some new results. International Review of Applied Economics 15, 261–85.
Felipe, J. and McCombie, J. 2001. The CES production function, the accounting identity, and Occam’s razor. Applied Economics 33, 1221–32.
Felipe, J. and McCombie, J. 2002. A problem with some recent estimations and interpretations of the mark-up in manufacturing industry. International Review of Applied Economics 16, 187–215.
Felipe, J. and McCombie, J. 2003. Some methodological problems with the neoclassical analysis of the East Asian miracle. Cambridge Journal of Economics 54, 695–721.
Felipe, J. and McCombie, J. 2005. Why are some countries richer than others? A skeptical view of Mankiw-Romer-Weil’s test of the neoclassical growth model. Metroeconomica 56, 360–92.
Felipe, J. and McCombie, J. 2006a. Is a theory of total factor productivity really needed? Metroeconomica (forthcoming).
Felipe, J. and McCombie, J. 2006b. The tyranny of the identity: growth accounting revisited. International Review of Applied Economics (forthcoming).
Ferguson, C. 1971. Capital theory up to date: a comment on Mrs. Robinson’s article. Canadian Journal of Economics 4, 250–54.
Fisher, F. 1965. Embodied technical change and the existence of an aggregate capital stock. Review of Economic Studies 32, 263–88.
Fisher, F. 1968. Embodied technology and the existence of labor and output aggregates. Review of Economic Studies 35, 391–412.
Fisher, F. 1969. Approximate aggregation and the Leontief conditions. Econometrica 37, 457–69.
Fisher, F. 1971. Aggregate production functions and the explanation of wages: a simulation experiment. Review of Economics and Statistics 53, 305–25.
Fisher, F. 1982. Aggregate production functions revisited: the mobility of capital and the rigidity of thought. Review of Economic Studies 49, 615–26.
Fisher, F. 1983. On the simultaneous existence of full and partial capital aggregates. Review of Economic Studies 50, 197–208.
Fisher, F. 1993. Aggregation: Aggregate Production Functions and Related Topics. Cambridge, MA: MIT Press.
Fisher, F., Solow, R. and Kearl, J. 1977. Aggregate production functions: some CES experiments. Review of Economic Studies 44, 305–20.
Garegnani, P. 1970. Heterogeneous capital, the production function and the theory of distribution. Review of Economic Studies 37, 407–36.
Gorman, W. 1953. Community preference fields. Econometrica 21, 63–80.
Gorman, W 1959. Separable utility and aggregation. Econometrica 27, 469–81.
Gorman, W. 1968. Measuring the quantities of fixed factors. In Value, Capital, and Growth: Papers in Honour of Sir John Hicks, ed. J. Wolfe. Edinburgh: Edinburgh University Press.
Hicks, J. 1939. Value and Capital. Oxford: Clarendon Press.
Houthakker, H. 1955–56. The Pareto distribution and the Cobb-Douglas production function in activity analysis. Review of Economic Studies 23, 27–31.
Klein, L. 1946a. Macroeconomics and the theory of rational behavior. Econometrica 14, 93–108.
Klein, L. 1946b. Remarks on the theory of aggregation. Econometrica 14, 303–12.
Leontief, W. 1936. Composite commodities and the problem of index numbers. Econometrica 4, 39–59.
Leontief, W. 1947a. Introduction to a theory of the internal structure of functional relationships. Econometrica 15, 361–73.
Leontief, W. 1947b. A note on the interrelationship of subsets of independent variables of a continuous function with continuous first derivatives. Bulletin of the American Mathematical Society 53, 343–50.
Levhari, D. 1968. A note on Houthakker’s aggregate production function in a multi-firm industry. Econometrica 36, 151–4.
May, K. 1946. The aggregation problem for a one-industry model. Econometrica 14, 285–98.
May, K. 1947. Technological change and aggregation. Econometrica 15, 51–63.
Nataf, A. 1948. Sur la possibilité de construction de certains macromodcles. Econometrica 16, 232–44.
Samuelson, P. 1961–62. Parable and realism in capital theory: the surrogate production function. Review of Economic Studies 29, 193–206.
Sato, K. 1975. Production Functions and Aggregation. Amsterdam: North-Holland.
Shaikh, A. 1980. Laws of production and laws of algebra: Humbug II. In Growth, Profits and Property: Essays in the Revival of Political Economy, ed. E. Nell. Cambridge: Cambridge University Press.
Simon, H. 1979. On parsimonious explanations of production relations. Scandinavian Journal of Economics 81, 459–74.
Simon, H. and Levy, F. 1963. A note on the Cobb-Douglas function. Review of Economic Studies, 93–4.
Sonnenschein, H. 1972. Market excess demand functions. Econometrica 40, 549–63.
Sonnenschein, H. 1973. Do Warms’ identity and continuity characterize the class of community excess demand functions? Journal of Economic Theory 6, 345–54.
Editor information
Copyright information
© 2008 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this entry
Cite this entry
Felipe, J., Fisher, F.M. (2008). Aggregation (Production). In: Durlauf, S.N., Blume, L.E. (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-58802-2_19
Download citation
DOI: https://doi.org/10.1007/978-1-349-58802-2_19
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-78676-5
Online ISBN: 978-1-349-58802-2