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Dynamic structure of disequilibrium models

Lu, M. and Qin, D. (1998) Dynamic structure of disequilibrium models Economics of Planning, 31, (1), pp. 15-27.

Record type: Article

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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More information

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: 17 Jul 2017 15:54

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Contributors

Author: M. Lu
Author: D. Qin

University divisions

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