The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Aggregation (Production)

  • Jesus Felipe
  • Franklin M. Fisher
Reference work entry


Aggregation concerns the conditions under which several variables can be treated as one, or macro-relationships derived from micro-relationships. This problem is especially important in production, where, without proper aggregation, one cannot interpret the properties of the aggregate production function. The conditions under which aggregate production functions exist are so stringent that real economies surely do not satisfy them. The aggregation results pose insurmountable problems for theoretical and applied work in fields such as growth, labour or trade. They imply that intuitions based on micro variables and micro production functions will often be false when applied to aggregates.


Aggregation (production) Cambridge capital theory debates Capital aggregation Cobb–Douglas functions Endogenous growth Growth accounting Hicks, J. Hicks–Leontief aggregation Labour aggregation Leontief, W. National Income and Products Account (NIPA) Neoclassical growth theory Output aggregation Production functions Productivity (measurement problems) Total factor productivity 

JEL Classifications

E10 C43 B41 E01 E1 E23 
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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jesus Felipe
    • 1
  • Franklin M. Fisher
    • 1
  1. 1.