Aggregate consumption with heterogeneous agents and a changing income distribution

A simple Monte-Carlo model is used to demonstrate that the statistical problems typical for aggregate consumption, such as autocorrelation and noncointegration, can be generated through a change in income distribution if individual consumers are sufficiently heterogeneous in their marginal propensity to consume. The results are obtained for individual consumers who are assumed to be completely myopic. The dynamics at the aggregate level can, therefore, be attributed only to the aggregation process, not to dynamic optimization of individual consumers or to adjustment costs and lags on the part of a representative agent.