ABSTRACT
The representative agent framework has a long tradition (Marshall, 1920) and has been one of the most successful tools in economics (Hartley, 1997). 1 It is still the cornerstone of microfoundations in macroeconomics and of aggregation in the classical literature (see e.g. Lucas, 1975; Kydland and Prescott, 1982; Long and Plosser, 1983) because the aggregation process allows any difference between the behaviour of individually optimizing agents and that of aggregate variables to be ruled out.
