The assumption that production in an economic system may be described by an aggregate neoclassical production function is at the heart of most modern equilibrium neoclassical business cycles and growth models. Its validity requires stringent assumptions on individual production functions and market structure. In this paper, the likelihood that an aggregate neoclassical production function could emerge from a simple heterogeneous production system is assessed by the use of computer simulations. The conclusion is that there exists a world of significant size for which the aggregate neoclassical theory of production does not hold
The 40% Neoclassical Aggregate Theory of Production. Results of a Simulation Investigation / Zambelli, Stefano. - In: CAMBRIDGE JOURNAL OF ECONOMICS. - ISSN 0309-166X. - STAMPA. - 2004:28(2004), pp. 99-120.
The 40% Neoclassical Aggregate Theory of Production. Results of a Simulation Investigation
Zambelli, Stefano
2004-01-01
Abstract
The assumption that production in an economic system may be described by an aggregate neoclassical production function is at the heart of most modern equilibrium neoclassical business cycles and growth models. Its validity requires stringent assumptions on individual production functions and market structure. In this paper, the likelihood that an aggregate neoclassical production function could emerge from a simple heterogeneous production system is assessed by the use of computer simulations. The conclusion is that there exists a world of significant size for which the aggregate neoclassical theory of production does not holdFile | Dimensione | Formato | |
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