Representative and Heterogeneous Agents: Theory and Evidence

30 Pages Posted: 6 Jun 2006 Last revised: 8 Dec 2018

See all articles by Yosef Bonaparte

Yosef Bonaparte

University of Colorado at Denver - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 9, 2009

Abstract

This paper analyzes the theoretical and empirical findings for representative and heterogeneous agents for a host of economic issues including market completeness, consumption growth variability, income risk, equilibrium interest rate, and welfare gains from eliminating a Real Business Cycle (RBC). We introduce three types of heterogeneity: state, preferences, and beliefs and show that in some cases the heterogeneous agent framework can be viewed as complementary to the representative agent, whereas in other cases it can be seen as a substitute.

Keywords: Real business cycle, preferences, time inconsistent, and behavior finance

JEL Classification: D84, E32, E43, G12, G14

Suggested Citation

Bonaparte, Yosef, Representative and Heterogeneous Agents: Theory and Evidence (May 9, 2009). Available at SSRN: https://ssrn.com/abstract=905902 or http://dx.doi.org/10.2139/ssrn.905902

Yosef Bonaparte (Contact Author)

University of Colorado at Denver - Department of Finance ( email )

United States

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