Aggregation rules across 3 different households

General DSGE Modeling
1

Dear all,

I just wanted to know if the standard aggregation rule for Ricardian vs Non-Ricardian households used in DSGE models could also apply to 3 households?

Aggregate consumption = share of household 1 * C_1 + share of household 2 * C_2 + (1- share household 1 - share household 2) * C_3

When I do that and resolve my problem, Dynare give me odd results for one household. The household with the highest share (65%) in the economy has the lowest total consumption which is odd.

Thanks

2

Hi dacorb

I reckon this is the correct way to aggregate. Regarding the per capita values in steady state, it is difficult to tell without seeing the model.

Best
Ivan

1 Like
3

Yes, you need to weight with the share of households. Why do find it strange that

4

Thank you both.

Actually, all is good ! It was just a rescaling problem.

Wishing you a good day ahead.