Abstract

This paper makes a case for disaggregating the company sector in economic policy modeling and reports the first attempt to construct projections for the U.K. company sector using individual company models. It outlines the disaggregated model and explores for each endogenous variable the type of improvement in modeling that disaggregation can offer. The scale of aggregation biases is demonstrated by comparing illustrative projections for the disaggregated model and for an aggregate counterpart model. These projections also suggest the areas of policy making to which the model can contribute.

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