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Testing for Consistent Aggregation
Author(s) -
Chambers Robert G.,
Pope Rulon D.
Publication year - 1991
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242833
Subject(s) - constructive , macro , aggregate (composite) , focus (optics) , econometrics , aggregate demand , economics , computer science , supply and demand , aggregate supply , microeconomics , empirical research , index (typography) , process (computing) , mathematics , macroeconomics , statistics , monetary policy , materials science , physics , optics , composite material , programming language , operating system , world wide web
This paper designs workable empirical procedures for testing or imposing supply (demand)‐price aggregators. Only single‐equation methods are considered to shift the focus from any particular optimizing paradigm toward the necessities for correctly tabulating firm‐level supplies (demands) and aggregate supply (demand). Both macro‐and micro‐level tests for consistent aggregation are developed. And constructive rules for aggregation based upon empirically observed micro behavior are provided in tabular form. Empirical tests reveal no support for the aggregate price most commonly reported by USDA. The constructive rules are then used to develop a new wheat‐price index consistent with supply aggregation.