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Maximum entropy and the existence of consistent aggregates: An application to U.S. banking

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  • Golan, Amos
  • Kim, Moshe

Abstract

A non-parametric framework for testing the existence of aggregates is developed. The framework is based on the notion of the maximum entropy formalism which is applied to model the size distribution of firms. The theory, once presented, is applied to the US banking industry in order to test for the existence 'of a consistent output-aggregate. The existence of an output-aggregate in banking can facilitate much of the empirical research in this industry and shed some light on the industry's long-run market structure.

Suggested Citation

  • Golan, Amos & Kim, Moshe, 1992. "Maximum entropy and the existence of consistent aggregates: An application to U.S. banking," Bank of Finland Research Discussion Papers 26/1992, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp1992_026
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    References listed on IDEAS

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    1. repec:zbw:bofrdp:1992_025 is not listed on IDEAS
    2. repec:zbw:bofrdp:1992_004 is not listed on IDEAS
    3. Kim, Moshe, 1986. "Banking technology and the existence of a consistent output aggregate," Journal of Monetary Economics, Elsevier, vol. 18(2), pages 181-195, September.
    4. Berndt, Ernst R & Christensen, Laurits R, 1974. "Testing for the Existence of a Consistent Aggregate Index of Labor Inputs," American Economic Review, American Economic Association, vol. 64(3), pages 391-404, June.
    5. repec:bla:scandj:v:94:y:1992:i:2:p:215-27 is not listed on IDEAS
    6. Denny, Michael & Fuss, Melvyn A, 1977. "The Use of Approximation Analysis to Test for Separability and the Existence of Consistent Aggregates," American Economic Review, American Economic Association, vol. 67(3), pages 404-418, June.
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