Dynamic structure of disequilibrium models
Dynamic structure of disequilibrium models
This 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; 4) The isomerism between quantity disequilibrium and price changes makes it unnecessary to lean on the 'min condition' to characterise disequilibrium.
disequilibrium, min condition, nonstationarity, centrally planned economy
15-27
Lu, M.
e7eb361f-81b6-4db9-a931-e200ac3afca2
Qin, D.
b94cee4e-ab86-4453-a677-2196b17efff4
1998
Lu, M.
e7eb361f-81b6-4db9-a931-e200ac3afca2
Qin, D.
b94cee4e-ab86-4453-a677-2196b17efff4
Lu, M. and Qin, D.
(1998)
Dynamic structure of disequilibrium models.
Economics of Planning, 31 (1), .
Abstract
This 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; 4) The isomerism between quantity disequilibrium and price changes makes it unnecessary to lean on the 'min condition' to characterise disequilibrium.
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Published date: 1998
Keywords:
disequilibrium, min condition, nonstationarity, centrally planned economy
Identifiers
Local EPrints ID: 32996
URI: http://eprints.soton.ac.uk/id/eprint/32996
ISSN: 0013-0451
PURE UUID: c7f22ac2-49e5-497f-8568-e34bc5d446a6
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Date deposited: 21 Jun 2007
Last modified: 08 Jan 2022 01:06
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Author:
M. Lu
Author:
D. Qin
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