Dynamic Structure of Disequilibrium Models
AbstractThis paper investigates the dynamic structure of a standard disequilibrium model. By assuming that the model variables are non-stationary time series with respect to ample empirical evidence, we find the following: 1) it is the exogenous variables rather than the price adjustment process that form the real adjustment force of the model; 2) quantity disequilibrium and price disequilibrium are isomeric in the model, and follow a weakly stationary process when all the variables are I(1) nonstationary; 3) the disequilibrium process has a none-zero mean when the weakly exogenous variables of the demand equation do not cointegrate with those of the supply equation, corresponding to certain 'chronic disequilibrium' phenomena; and 4) the isomerism between quantity disequilibrium and price changes makes it unnecessary to lean on the 'min condition' to characterise disequilibrium. Copyright 1998 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Economics of Planning.
Volume (Year): 31 (1998)
Issue (Month): 1 ()
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Web page: http://www.springerlink.com/link.asp?id=113294
Other versions of this item:
- Qin, D. & Lu, M., 1996. "Dynamic structure of disequilibrium models," Discussion Paper Series In Economics And Econometrics 9631, Economics Division, School of Social Sciences, University of Southampton.
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- Uctum, Remzi, 2007.
"Économétrie des modèles à changement de régimes : un essai de synthèse,"
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- Qin, Duo, 1998. "Disequilibrium institutional factors in aggregate money demand: evidence from three economies," Journal of Development Economics, Elsevier, vol. 57(2), pages 457-471.
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