Abstract
Aggregate demand theory investigates the properties of market demand functions. These functions are obtained by summing the preference maximizing actions of individual agents. The study of aggregate demand theory is primarily motivated by the fact that market demand functions, rather than individual demand functions, are the data of economic analysis. In general, market demand functions do not inherit the structure which is imposed on individual demand functions by the utility hypothesis. Such structure, when present, enables us to obtain stronger predictions from available data.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Sonnenschein, H. (2008). Aggregate Demand Theory. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_667-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_667-2
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Latest
Aggregate Demand Theory- Published:
- 23 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_667-2
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Aggregate Demand Theory- Published:
- 21 December 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_667-1