Skip to main content
SpringerLink
Log in

Aggregation (Production)

  • Reference work entry
  • First Online:
Book cover The New Palgrave Dictionary of Economics

  • 39 Accesses

Abstract

Aggregation concerns the conditions under which several variables can be treated as one, or macro-relationships derived from micro-relationships. This problem is especially important in production, where, without proper aggregation, one cannot interpret the properties of the aggregate production function. The conditions under which aggregate production functions exist are so stringent that real economies surely do not satisfy them. The aggregation results pose insurmountable problems for theoretical and applied work in fields such as growth, labour or trade. They imply that intuitions based on micro variables and micro production functions will often be false when applied to aggregates.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 6,499.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 8,499.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Bibliography

  • Blackorby, C., and W. Schworm. 1984. The structure of economies with aggregate measures of capital: A complete characterization. Review of Economic Studies 51: 633–650.

    Article  Google Scholar 

  • Blackorby, C., and W. Schworm. 1988. The existence of input and output aggregates in aggregate production functions. Econometrica 56: 613–643.

    Article  Google Scholar 

  • Blackorby, C., G. Lay, D. Nissen, and R. Russell. 1970. Homothetic separability and consumer budgeting. Econometrica 38: 468–472.

    Article  Google Scholar 

  • Eastern Economic Journal. 2005. Symposium on the aggregate production function. 31(3).

    Google Scholar 

  • Felipe, J. 2001. Endogenous growth, increasing returns, and externalities: An alternative interpretation of the evidence. Metroeconomica 52: 391–427.

    Article  Google Scholar 

  • Felipe, J., and F. Fisher. 2003. Aggregation in production functions: What applied economists should know. Metroeconomica 54: 208–262.

    Article  Google Scholar 

  • Felipe, J., and C. Holz. 2001. Why do aggregate production functions work? Fisher’s simulations, Shaikh’s identity, and some new results. International Review of Applied Economics 15: 261–285.

    Article  Google Scholar 

  • Felipe, J., and J. McCombie. 2001. The CES production function, the accounting identity, and Occam’s razor. Applied Economics 33: 1221–1232.

    Article  Google Scholar 

  • Felipe, J., and J. McCombie. 2002. A problem with some recent estimations and interpretations of the mark-up in manufacturing industry. International Review of Applied Economics 16: 187–215.

    Article  Google Scholar 

  • Felipe, J., and J. McCombie. 2003. Some methodological problems with the neoclassical analysis of the East Asian miracle. Cambridge Journal of Economics 54: 695–721.

    Article  Google Scholar 

  • Felipe, J., and J. McCombie. 2005. Why are some countries richer than others? A skeptical view of Mankiw–Romer–Weil’s test of the neoclassical growth model. Metroeconomica 56: 360–392.

    Article  Google Scholar 

  • Felipe, J. and McCombie, J. 2006a. Is a theory of total factor productivity really needed? Metroeconomica (forthcoming).

    Google Scholar 

  • Felipe, J. and McCombie, J. 2006b. The tyranny of the identity: Growth accounting revisited. International Review of Applied Economics (forthcoming).

    Google Scholar 

  • Ferguson, C. 1971. Capital theory up to date: A comment on Mrs. Robinson’s article. Canadian Journal of Economics 4: 250–254.

    Article  Google Scholar 

  • Fisher, F. 1965. Embodied technical change and the existence of an aggregate capital stock. Review of Economic Studies 32: 263–288.

    Article  Google Scholar 

  • Fisher, F. 1968. Embodied technology and the existence of labor and output aggregates. Review of Economic Studies 35: 391–412.

    Article  Google Scholar 

  • Fisher, F. 1969. Approximate aggregation and the Leontief conditions. Econometrica 37: 457–469.

    Article  Google Scholar 

  • Fisher, F. 1971. Aggregate production functions and the explanation of wages: A simulation experiment. Review of Economics and Statistics 53: 305–325.

    Article  Google Scholar 

  • Fisher, F. 1982. Aggregate production functions revisited: The mobility of capital and the rigidity of thought. Review of Economic Studies 49: 615–626.

    Article  Google Scholar 

  • Fisher, F. 1983. On the simultaneous existence of full and partial capital aggregates. Review of Economic Studies 50: 197–208.

    Article  Google Scholar 

  • Fisher, F. 1993. Aggregation: Aggregate production functions and related topics. Cambridge, MA: MIT Press.

    Google Scholar 

  • Fisher, F., R. Solow, and J. Kearl. 1977. Aggregate production functions: Some CES experiments. Review of Economic Studies 44: 305–320.

    Article  Google Scholar 

  • Garegnani, P. 1970. Heterogeneous capital, the production function and the theory of distribution. Review of Economic Studies 37: 407–436.

    Article  Google Scholar 

  • Gorman, W. 1953. Community preference fields. Econometrica 21: 63–80.

    Article  Google Scholar 

  • Gorman, W. 1959. Separable utility and aggregation. Econometrica 27: 469–481.

    Article  Google Scholar 

  • 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.

    Google Scholar 

  • Hicks, J. 1939. Value and capital. Oxford: Clarendon Press.

    Google Scholar 

  • Houthakker, H. 1955. The Pareto distribution and the Cobb–Douglas production function in activity analysis. Review of Economic Studies 23: 27–31.

    Article  Google Scholar 

  • Klein, L. 1946a. Macroeconomics and the theory of rational behavior. Econometrica 14: 93–108.

    Article  Google Scholar 

  • Klein, L. 1946b. Remarks on the theory of aggregation. Econometrica 14: 303–312.

    Article  Google Scholar 

  • Leontief, W. 1936. Composite commodities and the problem of index numbers. Econometrica 4: 39–59.

    Article  Google Scholar 

  • Leontief, W. 1947a. Introduction to a theory of the internal structure of functional relationships. Econometrica 15: 361–373.

    Article  Google Scholar 

  • 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: 343–350.

    Article  Google Scholar 

  • Levhari, D. 1968. A note on Houthakker’s aggregate production function in a multi-firm industry. Econometrica 36: 151–154.

    Article  Google Scholar 

  • May, K. 1946. The aggregation problem for a one-industry model. Econometrica 14: 285–298.

    Article  Google Scholar 

  • May, K. 1947. Technological change and aggregation. Econometrica 15: 51–63.

    Article  Google Scholar 

  • Nataf, A. 1948. Sur la possibilité de construction de certains macromodčˇes. Econometrica 16: 232–244.

    Article  Google Scholar 

  • Samuelson, P. 1961. Parable and realism in capital theory: The surrogate production function. Review of Economic Studies 29: 193–206.

    Article  Google Scholar 

  • Sato, K. 1975. Production functions and aggregation. Amsterdam: North-Holland.

    Google Scholar 

  • 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.

    Google Scholar 

  • Simon, H. 1979. On parsimonious explanations of production relations. Scandinavian Journal of Economics 81: 459–474.

    Article  Google Scholar 

  • Simon, H., and F. Levy. 1963. A note on the Cobb–Douglas function. Review of Economic Studies: 93–94.

    Google Scholar 

  • Sonnenschein, H. 1972. Market excess demand functions. Econometrica 40: 549–563.

    Article  Google Scholar 

  • Sonnenschein, H. 1973. Do Walras’ identity and continuity characterize the class of community excess demand functions? Journal of Economic Theory 6: 345–354.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Jesus Felipe & Franklin M. Fisher

Authors
  1. Jesus Felipe
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Franklin M. Fisher
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Copyright information

© 2018 Macmillan Publishers Ltd.

About this entry

Check for updates. Verify currency and authenticity via CrossMark

Cite this entry

Felipe, J., Fisher, F.M. (2018). Aggregation (Production). In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2552

Download citation

Publish with us

Policies and ethics

Search

Navigation